- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 14. Credit Risk
- Subject 3. Factors Impacting Yield Spreads
CFA Practice Question
In general, the credit spread ______.
B. widens during economic contractions
C. remains stable over time
A. widens during economic expansions
B. widens during economic contractions
C. remains stable over time
Correct Answer: B
User Contributed Comments 5
| User | Comment |
|---|---|
| nija | Credit spread is inversely propotional to expansion/contraction |
| mrushdi | During economic contraction companies have to offer a high margin to retain bond holers, otherwise being moved to treasury stock. |
| johntan1979 | Flight to quality |
| praj24 | Wiz Khalifa - flight school |
| Antoinepo | Wiz- Rooftop |