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2 December, 05:58

The spread between the interest rates on Baa corporate bonds and U. S. government bonds is very large during the Great Depression years 1930-1933. Explain this difference using the bond supply and demand analysis.

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  1. 2 December, 08:50
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    During the Great Depression many businesses failed. The default risk for the corporate bond increased compared to the default-free Treasury bond. The demand for corporate bonds decreased while the demand for Treasury bonds increased resulting in a larger risk premium.
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Home » Business » The spread between the interest rates on Baa corporate bonds and U. S. government bonds is very large during the Great Depression years 1930-1933. Explain this difference using the bond supply and demand analysis.
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