3. The coronavirus continues to have a major impact on interest rates. In Data Assignment #2 you calculated and graphed interest rate spreads. The spread between default risk free government bonds, and private corporate bonds, jumped in 2020 when covid emerged and the economy shut down. What caused the jump in the interest rate spread when covid hit? Use supply and demand to illustrate your answer. Explain shift factors for full credit. Label axis and curves. (HINT: before doing shifts, set up initial spread (default risk premium)

3. The coronavirus continues to have a major impact on interest rates. In Data Assignment #2 you calculated and graphed interest rate spreads. The spread between default risk free government bonds, and private corporate bonds, jumped in 2020 when covid emerged and the economy shut down. What caused the jump in the interest rate spread when covid hit? Use supply and demand to illustrate your answer. Explain shift factors for full credit. Label axis and curves. (HINT: before doing shifts, set up initial spread (default risk premium)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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