Interest rates spreads between corporate and government bonds ________.
A)are procyclical
B)have the same characteristics as the government interest rate spreads
C)are countercyclical
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

Interest rate spreads between corporate and government bonds are generally considered countercyclical. This means that the spreads tend to widen during economic downturns as the risk of corporate default increases, leading investors to demand higher yields for taking on additional risk compared to safer government bonds.

Interest Rates Spreads Between Corporate and Government Bonds ________