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Suppose there is a cyber attack on Italy. The hackers manage to steal some wealth from Italian citizens. They also manage to delete Italian companies'
Suppose there is a cyber attack on Italy. The hackers manage to steal some wealth from Italian citizens. They also manage to delete Italian companies' Research & Development blueprints, which diminishes the companies' investment opportunities in the future. There is some credible analysis by researchers which shows that the wealth effect is likely to be stroger than the investment opportunity effect. Which of the following statements about the Italian corporate bond market is most likely true? A. There is not information given in the question. B. Lower wealth reduces bond demand. Fewer investment opportunities reduce bond supply. Since the demand effect is likely stronger, bond prices fall. C. Lower wealth reduces bond demand. Fewer investment opportunities increase bond supply. Since the demand effect is likely stronger, bond prices fall. D. Lower wealth reduces bond demand. Fewer investment opportunities increase bond supply. Since the demand effect is likely stronger, bond prices rise. E. Lower wealth reduces bond demand. Fewer investment opportunities reduce bond supply. Since the demand effect is likely stronger, bond prices rise
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