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25 July, 09:10

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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  1. 25 July, 12:32
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    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.
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