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Default risk premia in the bond market tend to jump markedly higher when debt is downgraded from the investment-grade to medium-grade (aka junk) categories by

Default risk premia in the bond market tend to jump markedly higher when debt is downgraded from the investment-grade to medium-grade (aka junk) categories by the bond rating agencies. The most likely explanation for this can be attributed to:

A. Tax reciprocity agreements

B. The Fisher effect

C. The absolute priority rule

D. The prudent man rule

E. FASB Standard 179

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