When the growth rate of the economy slows we would expect:
A. the risk spread to increase more between Aaa and Baa securities than U.S. Treasuries and Aaa securities.
B. the risk spread to increase more between U.S. Treasury Securities and Aaa securities than between Aaa and Baa securities.
C. the risk to increase for U.S. Treasury securities.
D. investors to purchase more junk bonds in search of a higher yield.
Answer: A
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What will be an ideal response?
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