Use the figure below for the following questions;it shows the BAA corporate and 10-Year Treasury Bond yields.
-Consider Figure 14.1.What event likely caused the risk premium to jump to about 6 percent?
A)the financial crisis in September 2008
B)growing unrest in the Middle East
C)the Greek financial crisis
D)the growing trade deficit with China
E)not enough information

Question

Use the figure below for the following questions;it shows the BAA corporate and 10-Year Treasury Bond yields. 
-Consider Figure 14.1.What event likely caused the risk premium to jump to about 6 percent?
A)the financial crisis in September 2008 
B)growing unrest in the Middle East 
C)the Greek financial crisis 
D)the growing trade deficit with China 
E)not enough information

Quizplus · Accepted Answer

The financial crisis in September 2008 caused a significant increase in uncertainty in financial markets, leading investors to demand a higher risk premium to compensate for the increased risk of default. This is reflected in the sharp increase in the BAA corporate bond yield and the gap between the BAA and 10-year Treasury bond yields.

Use the Figure Below for the Following Questions;it Shows the BAA