CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

"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 ______.

A. default risk
B. credit spread risk
C. downgrade risk
Correct Answer: B

Business cycle conditions affect the spread in required return between securities with different credit risk classifications.

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
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