In response to the financial crisis of 2007-2009, the yield spread between Aaa corporate bonds and treasury bonds:
A)widened
B)narrowed
C)remained the same
D)none of the above

Question

Quizplus · Accepted Answer

During times of financial crisis, investors tend to become risk-averse, causing demand for safer investments such as treasury bonds to increase, thereby decreasing their yield. Aaa corporate bonds, on the other hand, become riskier, causing their yield to increase, resulting in a widening of the yield spread between the two types of bonds.

In Response to the Financial Crisis of 2007-2009, the Yield