The "flight to safety" in the fall of 2007 led investors to ________, which led to ________.

Question

Quizplus · Accepted Answer

A "flight to safety" usually refers to investors selling risky assets, like stocks, and moving their money into safer assets, like government bonds. In this case, investors would have likely bought T-bills, which are considered very safe, leading to a rise in demand for them and a corresponding decrease in their yields. Meanwhile, the spread between LIBOR rates (a benchmark rate that reflects how much banks pay to borrow from each other) and T-bill yields likely increased, as investors became more hesitant to lend to riskier banks. The other choices do not align with a "flight to safety" or the events of the fall of 2007.

The "Flight to Safety" in the Fall of 2007 Led