The yield differential between high- and low-quality bonds tends to be larger in recessionary periods.

Name: The yield differential between high- and low-quality bonds tends to be larger in recessionary periods.
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During recessions, investors tend to become more risk-averse and demand higher yields as compensation for investing in riskier securities such as low-quality bonds. This leads to a larger yield differential between high- and low-quality bonds.

The Yield Differential Between High- and Low-Quality Bonds Tends to Be