Question: The graph shows the yield spread for Canada and the US from 1996 to 2015. The yield spread is the difference between the yield on

The graph shows the yield spread for Canada and the US

from 1996 to 2015. The yield spread is the difference between the

The graph shows the yield spread for Canada and the US from 1996 to 2015. The yield spread is the difference between the yield on 10 year maturity BBB corporate bond and an equivalent govemment bond. The spread is equal to the default risk premium. Notice the meanreverting pattem for the 1,rield spread. What positions would you have taken in the two bonds in 2008 to prot from the subsequent change in the Spread? Yield Spread: Soft and BBB \"Palm 3

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