In November 2011, the interest rate on 10 year Spanish and Italian bonds were 4 to 5 percentage points higher than the interest rate on comparable German bonds. What did that difference indicate?

Question

Quizplus · Accepted Answer

The difference in interest rates indicates that investors considered German bonds to be safer investments than Spanish or Italian bonds. The higher interest rates on Spanish and Italian bonds reflect a perception of higher risk in investing in those countries, such as concerns about their economies or political instability.

In November 2011, the Interest Rate on 10 Year Spanish