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Financial Economics QUESTION 2 Suppose that a profit-sharing plan has invested a substantial portion of your savings in your employer's bonds. A news story reports

Financial Economics

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QUESTION 2 Suppose that a profit-sharing plan has invested a substantial portion of your savings in your employer's bonds. A news story reports that your employer's auditor is issuing a qualified report because of the use of questionable accounting practices. a. Will the risk premium on your employer's bonds increase or decrease? Why? (12 marks) b. What will happen to the market value of your investment in your employer's bonds? (13 marks)

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