- CFA Exams
- CFA Level I Exam
- Study Session 15. Fixed Income (2)
- Reading 46. Understanding Fixed-Income Risk and Return
- Subject 8. Credit and Liquidity Risk
CFA Practice Question
The credit spread widens during economic contractions, due to ______.
B. increased chances of financial distress
C. reduced stock prices
A. lower interest rates
B. increased chances of financial distress
C. reduced stock prices
Correct Answer: B
User Contributed Comments 1
| User | Comment |
|---|---|
| johntan1979 | A Interest rates are lower during economic contractions, but it does not explain the widening credit spread C There is no correlation between stock prices and the credit spread |