During the credit crunch in the Great Depression, the spread-the interest rate on Baa corporate bonds minus the interest rate for government borrowing:
A)became negative.
B)was equal to zero.
C)grew to more than 7%.
D)fluctuated randomly.

Question

Quizplus · Accepted Answer

During the Great Depression, the risk premium on corporate bonds increased significantly, causing the spread between Baa corporate bonds and government bonds to grow to more than 7%.

During the Credit Crunch in the Great Depression, the Spread-The