Question: During 2008, the yield gap (yield spread) between three-month AA-rated notes and three-month AA-rated non-financial notes continued to grow from near zero normal levels, soaring

During 2008, the yield gap (yield spread) between three-month AA-rated notes and three-month AA-rated non-financial notes continued to grow from near zero normal levels, soaring to a high of more than 1% in October 2008. How would you account for this sudden rise in the spread?

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The sudden rise in the spread is due to the financial crisis of 2008 which caused investor... View full answer

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