Economics · Financial Markets and Business Cycles
During the transition from the Peak phase to the Contraction (Recession) phase, what is the most typical and sharpest change observed in the corporate bond market?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1A contraction in the volume of new equity issuance as companies prefer debt over equity.
- 2A sharp narrowing of the Credit Spread (the difference between corporate bond yield and government bond yield).
- 3A sharp widening of the Credit Spread, especially for high-yield (junk) bonds, due to heightened default risk perception.✓
- 4A shift in investor preference from short-term Commercial Paper to long-term investment-grade bonds.
Correct answer
A sharp widening of the Credit Spread, especially for high-yield (junk) bonds, due to heightened default risk perception.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Economics?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Financial Markets and Business Cycles MCQs →Want more practice questions on Financial Markets and Business Cycles?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Economics · Financial Markets and Business Cycles