The risk$-$free rate would increase while corporate bond yields remain stable.

The spread between corporate bond yields and the risk$-$free rate would narrow.

Question $15$

$2$ pts

If a country with a lower credit rating than the U$.$S$.$ issues bonds with a higher yield, why might investors still prefer U$.$S$.$ Treasuries?

U$.$S$.$ Treasuries are the only bonds accepted as collateral in financial markets.

He Treacuries offer lower risk and higher liquidity.

U$.$S$.$ Treasuries offer tax advantages over foreign bonds.

The higher yield of foreign bonds is always illusory due to currency risk.

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