All of the following statements is correct EXCEPT
A)The financial crisis and recession of 2007-2009 had strong effects on the ability of borrower firms to obtain short-term financing and for firms with surplus funds to invest in short-term instruments.
B)During the 2007-2009 financial crisis and recession, major spikes in the risk premium between commercial paper and T-bills indicate major stresses to the financial system-both for issuers and investors.
C)During the 2007-2009 financial crisis and recession, major spikes in the risk premium between commercial paper and T-bills indicate periods of investors fleeing investments of perceived risk (commercial paper) and placing funds in the safest assets (T-Bills).
D)During the 2007-2009 financial crisis and recession, major spikes in the risk premium between commercial paper and T-bills indicate periods of investors fleeing investments of perceived risk (T-Bills) and placing funds in the safest assets (corporate bonds).
E)all of the above are correct

Question

Quizplus · Accepted Answer

All statements are true except for statement D, which incorrectly states that investors were fleeing investments in T-bills during the crisis. In fact, T-bills were considered a safe haven during the crisis and experienced increased demand, leading to lower yields and reduced risk premiums compared to other short-term instruments like commercial paper. Therefore, statement D is incorrect.

All of the Following Statements Is Correct EXCEPT