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4. What would you expect to happen to the spread between yields on commercial paper ant Treasury bills if the economy were to enter a steep recession?
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4. What would you expect to happen to the spread between yields on commercial paper ant Treasury bills if the economy were to enter a steep recession?

User Darkownage
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5 votes

Answer: I will expect the spread between the yields to WIDEN

Explanation: The spread between the yield on Treasury bills and commercial paper will widen if the economy were to enter a steep economy.

A downward slope in the economy increases credit risk. It leads to a situation whereby Investors demand a greater premium on debt securities which are subject to default risk.

User Airy
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