CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

Credit spreads become wider during economic contractions, as investors tend to sell off low-quality corporate issues and invest the proceeds in government bonds. A change in yield-to-maturity in this case could be caused by a change in the ______.

I. benchmark yield
II. credit risk
III. liquidity risk
Correct Answer: I, II and III

This is known as "flight to quality". All three could change during economic contractions.

User Contributed Comments 0

You need to log in first to add your comment.