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
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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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 defaut 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 lustrate your answer. Explain shift factors for full credit. Label axis and curves (HINT: before doing shifts, set up
Initial spread (default risk premium
Price
Price
Quantity bond
Quantity bond
Junk bond 10 year
Government 10 year bond
Transcribed Image Text: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 defaut 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 lustrate your answer. Explain shift factors for full credit. Label axis and curves (HINT: before doing shifts, set up Initial spread (default risk premium Price Price Quantity bond Quantity bond Junk bond 10 year Government 10 year bond
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