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The government is considering taxing the sale of internet items. This would impact the interest rate...

  1. The government is considering taxing the sale of internet items. This would impact the interest rate on Amazon bonds.
  1. What would happen to the interest rate on Amazon bonds.
  2. What type of risk is this?
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Answer #1

A. This will be having a negative impact on the bonds of the Amazon because it will be increasing the tax on the Amazon products and the Amazon profits are going to be lower and it will also mean that the ratings of the Amazon bonds are also going to be lower and Bond yields on Amazon bonds will be higher,and the prices of the Amazon bonds are lower due to implementation of the taxation by the government

B. This is a type of systematic risk or market risk and this can never be avoided by any company because they will always have the risk of operation into an economy and these are the macro risk that can never be eliminated.

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