Question

Everything else held​ constant, if the federal government were to guarantee today that it will pay creditors if a corporation goes bankrupt in the​ future, the interest rate on corporate bonds will​ ________ and the interest rate on Treasury securities will​ ________.

Answer 1

Answer:

decrease, increase.

Explanation:

Since the federal government has guaranteed that they will pay creditors if in case the corporation goes bankrupt in the future. This will result in a fall or decrease in the interest rates of the corporate bonds and the interest rates on the treasury will increase.