The State of California recently issued
$1.8
billion worth of municipal bonds. The underwriters of the issue were surprised by the high amount of orders for this bond because Callornia has the lowest bond rating (BBB) of any state in the United States. In fact, there were more orders for the bonds than there were bonds available. The reception of this issue implies that the risk premium on the Callfornia bonds, relative to AM-rated municipal bonds, has Select one: 2. deries ied: B. remained unchanged. c. increased.

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The State of California recently issued

$1.8

billion worth of municipal bonds. The underwriters of the issue were surprised by the high amount of orders for this bond because Callornia has the lowest bond rating (BBB) of any state in the United States. In fact, there were more orders for the bonds than there were bonds available. The reception of this issue implies that the risk premium on the Callfornia bonds, relative to AM-rated municipal bonds, has Select one: 2. deries ied: B. remained unchanged. c. increased.

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