The correct option is (b) rise.
When the economy is moving toward a recession, the yield on riskier bonds will tend to rise.
The value of previously issued bonds decreases when interest rates increase. As a result, if one has current bonds, their value declines, and interest rates rise (which frequently occurs during a recession). Another danger is the lower returns on bonds compared to stocks. As we previously mentioned, bond investments are often less volatile than equities.
When there is a higher demand for bonds, the Treasury won't need to raise yields to attract investors. When investors are unwilling to spend money purchasing bonds, their prices fall, which raises interest rates.
We can therefore draw the conclusion that when the economy is headed for a recession, the yield on riskier bonds will typically increase.
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