When the Russian government defaulted on its bonds in August 1998:
A) Risk spreads decreased significantly
B) Yields on U.S. Treasury securities fell while yields on corporate bonds rose
C) Yields on U.S. Treasury securities rose while prices of corporate bonds rose
D) Risk spreads increased significantly

Question

Quizplus · Accepted Answer

The Russian default led to a flight to quality, where investors moved their money into safer U.S. Treasury securities, causing their yields to fall, while the yields on riskier corporate bonds rose due to increased risk spreads.

When the Russian Government Defaulted on Its Bonds in August