Question: On average, the yield spread between the AA bond and the AAA bond is 25 basis points. Currently, the yield spread is 35 basis points.

On average, the yield spread between the AA bond and the AAA bond is 25 basis points. Currently, the yield spread is 35 basis points. If you believe the yield spread will soon return to the historical average, you should ________.

Group of answer choices

buy the AAA and short the AA

short both the AA and the AAA

buy the AA and short the AAA

buy both the AA and the AAA

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