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Basic Question 0 of 4
"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 |
Your review questions and global ranking system were so helpful.
Lina
Learning Outcome Statements
define forward contracts, futures contracts, swaps, options (calls and puts), and credit derivatives and compare their basic characteristics
CFA® 2025 Level I Curriculum, Volume 5, Module 2.