Question

The ________, the difference between the interest rate on baa corporate bonds and u. s. treasury bonds. rose sharply during the great depression

Answer 1

The credit spread, the difference between the interest rate on baa corporate bonds and u. s. treasury bonds. rose sharply during the great depression.

The yield difference between a U.S. Treasury bond and another debt security with the same maturity but a different credit rating is known as a credit spread. spreads on credit between the U.S.

A credit spread is another name for an options strategy in which, on the same underlying security, a high premium option is written and a low premium option is purchased. As a result, the account of the individual performing the two trades receives credit.

Without the banks, which supported the 1920s credit boom, the uncontrolled speculation that caused the 1929 crash and the Great Depression that followed could not have occurred. To sustain continuous production increase, new enterprises that produce things like autos, radios, and refrigerators borrowed money.

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