Business, 06.08.2021 19:10 madi2878

During 2008, the difference in yield (the yield spread) between 3-month AA-rated financial commercial paper and 3-month AA-rated nonfinancial commercial paper steadily increased from its usual level of close to zero, spiking to over a full percentage point at its peak in October 2008. Which of the following explains this sudden increase? A. Increased yield spreads tend to occur because of the inefficient nature of nonfinancial commercial paper when economic instability is present.
B. The increase in the yield spread was due to government efforts to ease the debt burden for financial companies during the financial crisis.
C. The increase in the yield spread was a result of the decrease in demand for financial commercial paper due to the uncertainty and soundness of financial companies and banks.
D. The increase in the yield spread was caused by an increase in the supply of financial commercial paper to fund future real estate investments.

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