When characteristics of bonds are perceived as unfavorable or favorable to the holders of the bond, then differences of yield spread
Correct answer: B. must changes
- A. must not changes
- B. must changes
- C. must be debited
- D. must be credited
Explanation
Yield spreads respond to bond characteristics that increase or reduce risk, such as unfavorable security features or weaker credit quality. Consequently, the spread must change when those characteristics change.
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