CFA Practice Question

There are 136 practice questions for this study session.

CFA Practice Question

When credit spreads are narrowing relative to government bonds, which type of bonds will tend to perform the best?

A. Government bonds
B. Higher-rated corporate bonds
C. Lower-rated corporate bonds
Correct Answer: C

When credit spreads are narrowing relative to government bonds, the spread between higher- and lower-rated bond categories also narrows. Corporate bonds will generally outperform government bonds, and lower-rated corporate bonds will tend to outperform higher-rated corporate bonds.

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