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(Solved): he interest rate on Baa-rated corporate bonds rose during the 20072009 recession because of A. a ...
he interest rate on Baa-rated corporate bonds rose during the 20072009 recession because of A. a decrease in supply of Baa-rated corporate bonds. B. an increase in the default risk premium on Baa-rated corporate bonds. C. an increase in expected inflation. D. an increase in demand for Baa-rated corporate bonds.
The correct answer is B. an increase in the default risk premium on Baa-rated corporate bonds. During the 2007-2009 recession, the interest rate on Baa-rated corporate bonds rose. This increase in interest rates can be attributed to an increase in th...