Exam 6: The Economics of Interest-Rate Spreads and Yield Curves

If a company gets concessions from labor in union negotiations, one would expect a(n) _____ in the risk premia on its bonds due to an increase in

Risk structure models the yields of bonds

The recent increase in U.S. government debt could lead to a(n) _____ in yields due to an increase in

A downward sloping yield curve indicates a possible future recession.

Blue chip bonds tend to have

If Congress removed the tax exemption for municipal bonds, how would the risk premium on those bonds be affected? Use a graph to help explain.

Does the information in the table about the yield curve indicate a possible recession?

An increase in household wealth increases the risk premium of corporate bonds.

Government bonds are more liquid than corporate bonds.

A change in the risk of a bond affects the bond's risk premium.