A rise in the junk-bond spread indicates a growing fear among bond market investors that marginal-quality corporate borrowers are more likely to default on their debts.

Question

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A rise in the junk-bond spread, which is the difference in yield between junk bonds and safer government securities, indicates investors are demanding higher returns for the increased risk of default by lower-quality corporate borrowers, reflecting growing fear of defaults.

A Rise in the Junk-Bond Spread Indicates a Growing Fear