[Related to the Making the Connection] An article in the Wall Street Journal in 2016 noted that:

open double quoteOver

30% of euro-denominated investment-grade corporate bonds trade at a negative yield ... while 84% yield less than

1%.close double quote

Source: Christopher Whittall,

open double quoteBond

Investors Cash Out in Europe, Head to

U.S.,close double quote

Wall Street

Journal,

September 1, 2016.

What caused so many European corporate bonds to have negative interest rates?

A.

The European economy was growing at higher than normal rates.

B.

Central banks were slowing asset purchases.

C.

Inflation rates were consistently increasing.

D.

The European Central Bank cut interest rates to negative levels.

Why would anyone buy a bond with a negative interest rate?

A.

A lack of availability of government bonds.

B.

A lack of availability of corporate bonds.

C.

Competing interest rates on bonds and other securities of comparable risk were low.

D.

Many of the bond purchases were made by individual investors who were wary of investing in higher risk bonds.