The risk premium of corporate bonds typically increases
A) when the average price of corporate bonds increases.
B) during a recession.
C) when the interest rates on corporate bonds decreases.
D) when the risk premium on treasury bonds increases.

Question

Quizplus · Accepted Answer

The risk premium of corporate bonds typically increases during a recession, as investors become more risk averse and demand higher compensation for the risk of default.

The Risk Premium of Corporate Bonds Typically Increases