The Spread Between Interest Rates on Low Quality Corporate Bonds

question 59

Multiple Choice

The spread between interest rates on low quality corporate bonds and U.S. government bonds

• A)widened significantly during the Great Depression.
• B)narrowed significantly during the Great Depression.
• C)narrowed moderately during the Great Depression.
• D)did not change during the Great Depression.

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Definitions:

Consignment

An arrangement in which goods are left in the possession of another party to sell, with payment to the original owner occurring only after the sale.

Wharfage

A fee charged for the use of a wharf for loading or unloading cargo, or for the temporary storage of goods on the wharf area.

Sell-Off

Transaction in which assets are sold by one firm to another.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of accounts receivable, inventories, and meeting short-term liabilities.