Q. Is Ikeda most likely correct in his discussion of the term structure of credit spreads?
- Yes
- No, he is incorrect with regard to the typical term structure of credit spreads.
- No, he is incorrect with regard to the examples he gives.
(Answer- A)
Isn’t Example 2 incorrect? If we have high Probability of default, the spread curve may shift upward and steeper but not necessarily inverted?
Explained multiple times earlier. Check up.
Sharing the link of same would be kindly appreciated as I’m unable to find it.