Seeing is believing!
Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.
Basic Question 1 of 3
"As the growth rate in real gross national product slowed, the difference in yield between BAA rated and AAA rated bonds widened." This situation is an example of ______.
B. credit spread risk
C. downgrade risk
A. default risk
B. credit spread risk
C. downgrade risk
User Contributed Comments 4
| User | Comment |
|---|---|
| sarath | Business cycles affect the spread in required retuns between securities with different risk classifications.. |
| magicchip | flight to safety. |
| cong | When economy is in a bad condition, the credit spread widens. |
| 2014 | when economy is bad condition, banks reduces lending. Because credit risk rises |
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
Learning Outcome Statements
describe the uses of ratings from credit rating agencies and their limitations
CFA® 2025 Level I Curriculum, Volume 4, Module 14.