SECTION B (50 marks): Answer ONE Question. Your answer should not exceed the set words limit. Question B1 Consider the following statement: "Amidst the global pandemic, investors are disposing high yield bonds in search of safer alternatives! a) Critically evaluate the statement above and explain how this has affected bonds' credit spreads? (Hint: Remember that a credit spread is the difference in yield between two bonds of similar maturity but different credit quality.) (Word limit: 500) (25 marks) b) The yield curve has proved to be highly volatile as the coronavirus outbreak unfolded. A noticeable change is seen in the steepening of the yield curve. (1) Explain what this implies. (Word limit: 200) (12 marks) (ii) Refer an appropriate theory of the term structure of interest rate to support your arguments. (Word limit: 300) (13 marks) To 50 marks SECTION B (50 marks): Answer ONE Question. Your answer should not exceed the set words limit. Question B1 Consider the following statement: "Amidst the global pandemic, investors are disposing high yield bonds in search of safer alternatives! a) Critically evaluate the statement above and explain how this has affected bonds' credit spreads? (Hint: Remember that a credit spread is the difference in yield between two bonds of similar maturity but different credit quality.) (Word limit: 500) (25 marks) b) The yield curve has proved to be highly volatile as the coronavirus outbreak unfolded. A noticeable change is seen in the steepening of the yield curve. (1) Explain what this implies. (Word limit: 200) (12 marks) (ii) Refer an appropriate theory of the term structure of interest rate to support your arguments. (Word limit: 300) (13 marks) To 50 marks