Question

"An analysis of yield curves of U.S. Government and lower medium quality corporate bonds shows the yield spread to be widening over the last 4 months. This is an indication that investors expect the economy to:"

Answer 1

Step-by-step explanation:

recession

Answer:

To be going into recessionary situation over the coming time period. The widening spread indicates that the yield on lower grade corporate bond are higher than normal relative to yield bonds issued by government. This situation is happening due to investors investing highly in government bonds leading to increase in yields.