Question
In: Finance
If business regulatory costs are substantially reduced, using the supply and demand curves for bonds, we...
If business regulatory costs are substantially reduced, using the supply and demand curves for bonds, we can expect the equilibrium yield on bonds to _______________ and the equilibrium quantity of bonds issued to _______________.
Group of answer choices
increase; increase
increase; decrease
increase; can't tell
decrease; increase
decrease; decrease
decrease; can't tell
Solutions
Expert Solution
increase ; increase
Reduction in business regulatory cost leads to shift in supply curve of bond to right resulting in increase in equilibrium yield of bond. However this reduction of regulatory cost helps the company to issue more bonds to raise funds as debt is a cheaper source of capital and thus equilibrium quantity of bond will also increase.
jeff jeffy answered 2 years agoRelated Solutions
If business regulatory costs are substantially reduced, using the supply and demand curves for bonds, we...
If business regulatory costs are substantially reduced, using
the supply and demand curves for bonds, we can expect the
equilibrium price of bonds to _______________ and the equilibrium
quantity of bonds issued to _______________. Group of answer
choices
increase; increase
increase; decrease
increase; can't tell
decrease; increase
decrease; decrease
decrease; can't tell
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Price
Quantity demanded
Quantity supplied
$0
8
0
$1
7
1
$2
6
2
$3
5
3
$4
4
4
$5
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