During poor economic conditions,the spread between yields on high-grade and low-grade bonds:

Question

Quizplus · Accepted Answer

During poor economic conditions, investors become more risk-averse and seek safety, which leads to an increase in demand for high-grade bonds, driving down their yields. However, demand for low-grade bonds decreases, which leads to an increase in their yields. As a result, the spread between high-grade and low-grade bond yields increases.

During Poor Economic Conditions,the Spread Between Yields on High-Grade and Low-Grade