The collapse of the subprime mortgage market
A)did not affect the corporate bond market.
B)increased the perceived riskiness of Treasury securities.
C)reduced the Baa-Aaa spread.
D)increased the Baa-Aaa spread.

Question

Quizplus · Accepted Answer

The collapse of the subprime mortgage market increased the perceived riskiness of the overall credit markets, including corporate bonds. As a result, investors demanded higher yields on riskier bonds, leading to an increase in the Baa-Aaa spread.

The Collapse of the Subprime Mortgage Market