Which of the following statements is FALSE?
A) Investors pay less for bonds with credit risk than they would for an otherwise identical default-free bond.
B) Credit spreads fluctuate as perceptions regarding the probability of default change.
C) Credit spreads are high for bonds with high ratings.
D) We refer to the difference between the yields of the corporate bonds and the Treasury yields as the default spread or credit spread.

Question

Quizplus · Accepted Answer

Credit spreads are actually low for bonds with high ratings since they are considered to have lower credit risk.

Which of the Following Statements Is FALSE