Recent economic trend suggests that the economy is
Recent economic trend suggests that the economy is increasingly likely to enter a recession stage. What is the most likely impact on the yields of lower-quality corporate bonds and on credit spreads of lower-quality versus higher-quality corporate bonds?
A. One will increase and one will decrease.
B. Both will increase.
C. Both will decrease.
参考解答
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2024-11-14 18:44:01
Ans:B;Yields of lower quality increases: During economic contractions, the probability of default increases for lower- quality issues and their yields increase.Credit spreads increases: when an economic contraction is likely, investors tend to sell low-quality issues and buy high-quality issues, causing credit spreads of lower quality versus higher quality bonds to widen.
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