CFA Practice Question

There are 252 practice questions for this study session.

CFA Practice Question

If we observe an increasing default probability but decreasing benchmark rate over longer maturity periods, we will likely see a ______ credit spread curve.

A. upward-sloping
B. flat
C. downward-sloping
D. uncertain
Correct Answer: A

While the term structure of yields is hard to tell, the credit spread curve will likely be upward-sloping because of the increasing default probability.

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