Question

QUESTIONS What is the relationship between bond credit spreads and rating levels? Spreads increase as rating levels improve (going from CCC to MMA). Spreads decrease as rating levels improve (going from CCC to AAA) The relationship has no pattern d. There is no relationship QUESTION 6 The government of Venezuela announces that its GDP is declining, devalues its currency, and increases currency controls. You have also read reports about civil unrest after a recent election. What do you expect the impact to be on bond spreads? - Increase b. Decrease No change d. None of the above

Answer 1

Question - 5)

The correct answer is mentioned below..

The correct answer is option "A"

Spreads increase as the rating level improve (Going from CCC TO AAA) because The results show that after a change in the loan ratings the interest spread tends to increase while the committed exposure decreases. The impacts are highly statistically important and have big economic importance.

Question 6)

The correct answer is option "A" - Increases

Becuase Venezuela's 2027 bond increased nearly 7 percent in price on Monday in trading business on the first business day following the devaluation which announced on Friday night.The measure has spotted a shopping restriction in the capital structure as people expected new dual currency process willl result to higher prices for imported goods.