If more and more investors are willing to buy riskier invest-
ments, for example moving even cautiously from a portfolio
stashed in the Treasury market to one filled with investmentgrade
corporate bonds, that new demand bids up the price for
those corporate bonds. Prices and yields move in opposite directions,
so when investors pay a higher price for these corporate
bonds they get a lower yield. As prices of riskier assets rise, the
return for that added risk decreases.
ments, for example moving even cautiously from a portfolio
stashed in the Treasury market to one filled with investmentgrade
corporate bonds, that new demand bids up the price for
those corporate bonds. Prices and yields move in opposite directions,
so when investors pay a higher price for these corporate
bonds they get a lower yield. As prices of riskier assets rise, the
return for that added risk decreases.
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