In the fall of 1998 we saw an increase in the risk spread because:
A) The risk spread always increases as we approach the end of the year
B) The Russian government defaulted on some of its bonds
C) There was an extraordinarily large amount of corporate fraud being reported in 1998
D) There was a significant increase in U.S. income tax rates

Question

Quizplus · Accepted Answer

The Russian government's default on its bonds caused a ripple effect in global financial markets, leading to an increase in the risk spread. This event is widely recognized as a major contributor to the financial crisis of 1998. The other options given do not have a direct or significant impact on risk spread.

In the Fall of 1998 We Saw an Increase in the Risk