Credit yield spreads most likely widen in response to:
A) high demand for bonds.
B) weak performance of equities.
C) strengthening economic conditions.

Question

Quizplus · Accepted Answer

Credit yield spreads typically widen when there is a weak performance of equities because investors become more risk-averse and demand higher yields on bonds. A high demand for bonds (Choice A) would lead to tighter credit spreads as issuers can offer lower yields. Strengthening economic conditions (Choice C) can also lead to tighter credit spreads as investors become more confident and willing to take on more risk.

Credit Yield Spreads Most Likely Widen in Response To