Does governance of firms affect the prices of bonds

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Does governance of firms affect the prices of their bonds?

Point: No. Bond prices are primarily determined by interest rate movements and therefore are not affected by the governance of firms that issue the bonds.

Counter-Point: Yes. Bond prices reflect the risk of default. Firms with more effective governance may be able to reduce their default risk and thereby increase the prices of their bonds.

Who is correct? Use the internet to learn more about this issue and then formulate your own opinion.

Reference no: EM132861140

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