A Widening of the Yield Spread Between the Yield-To-Maturity on a BBB-Rate

question 31

Multiple Choice

A widening of the yield spread between the yield-to-maturity on a BBB-rate bond and that on a AAA-rated bond indicates

• A) an increase in the default premiums of the BBB class.
• B) an increase in the default premiums of two bond classes.
• C) a decrease in the level of market risk aversion.
• D) the economic climate has turned more favorable.

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Definitions:

Flex Plate

A metal disc that connects the engine to the torque converter in automatic transmissions, allowing power transfer.

Driven Member

A component in a mechanical system that receives motion or power from another component, rather than generating it.

Centrifugal Lock-up

A mechanism in torque converters that locks the turbine to the pump when sufficient speed is achieved, improving fuel efficiency by eliminating slip.

Weld-sealed

A term describing items or components that have been permanently joined or sealed together through welding, creating a strong and often airtight connection.