You are an investor and you expect a US recession. Which of the following would

Question

You are an investor and you expect a US recession. Which of the following would you expect to occur in the bond market during a US recession? (There is just one correct answer.)

a)     US government bonds to perform better than US corporate bonds

b)     The rate premium on US corporate bonds to fall

c)     US corporate utility bonds to perform worse than financial and industrial US corporate bonds

d)     Assuming nominal risk free rates decline the same amount for all US government bonds, short-term government bonds should perform better than long-term government bonds

Explanation / Answer

b) The rate premium on US corporate bonds to fall

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