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    Interest rates for corporate bonds and Treasury securities

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    Predict what will happen to interest rates on a corporation's bonds if the federal government guarantees today that it will pay creditors if the corporation goes bankrupt in the future. What will happen to the interest rates on Treasury securities?

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    Rates on corporate bonds will go down because their bonds are going to be less risky, since if something happened to ...

    Solution Summary

    The solution determines the interest rates for corporate bonds and treasury securities.