1. A one-year discount bond issued by X has a payout of $1,250 and today's price is $1,189. A one-year discount bond issued by Y has a payout of $382 and today's price is $354. Then the bond issued by X has a ____ yield than the bond issued by Y, and this could be because X has a ____ default risk.

Group of answer choices

higher; lower

lower; lower

lower; higher

higher; higher

2. Suppose that the tax advantage of municipal bonds over US Treasury bonds increases. In this case, we would expect that the demand curve for municipal bonds will _____ and as a result, the equilibrium price will ____.

Group of answer choices

decrease; rise

decrease; fall

increase; rise

increase; fall

Answer rating: 100% (QA)

1 Bond Yields and Default Risk The yield of a bond is calculated as the percentage return The yield ... View the full answer