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Suppose you learn that the Department of Justice has just announced a stepped-up effort to enforce insider-trading laws. What is likely to happen to the
Suppose you learn that the Department of Justice has just announced a stepped-up effort to enforce insider-trading laws. What is likely to happen to the value of bonds?
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Relative expected return will decline, demand will shift to the left, and bond prices will rise.
Information costs will rise, demand will shift to the left, and bond prices will fall.
Liquidity cost will fall, demand will shift to the left, and bond prices will rise.
Information costs will fall, demand will shift to the right, and bond prices will rise.
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