In response to the financial crisis of 2007-2009, the yield spread between AAA corporate bonds and treasury bonds:
A) widened
B) narrowed
C) remained the same
D) has no relationship

Question

Quizplus · Accepted Answer

During times of financial crises, investors typically seek the safety of government bonds, leading to a decrease in demand for corporate bonds. This results in an increase in the yield spread between corporate bonds and treasury bonds, as the yields on corporate bonds rise to attract investors. Therefore, the yield spread between AAA corporate bonds and treasury bonds likely widened during the financial crisis of 2007-2009.

In Response to the Financial Crisis of 2007-2009, the Yield