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Which statement reflects the conventional wisdom

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Question - In March 2018, suppose the yield for a corporate bond with the same maturity and coupon which is rated as BBB was 7% and the yield for AAA was 3%. One year later, the yield for a BBB bond was 9% and the yield for a AAA bond was 2%. Which statement reflects the conventional wisdom when provided with this information?

a) Investors expect a higher premium for growth opportunity in 2019 compared to 2018

b) Investors expect a higher premium for credit risk in 2019 compared to 2018

c) Investors expect a higher premium for growth opportunity in 2018 compared to 2019 Investors expect a higher premium for credit risk in 2018 compared to 2019

d) None of the above

Reference no: EM133159764

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