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Week 2: The spectrum of personal investments

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The figure is a line graph showing the credit risk spread (i.e. the difference) between the average yield on corporate bonds rated Baa by the ratings agency Moody’s and the yield on a US government bond with 10 years of life to maturity. The graph shows the, often marked, movement in this spread between 1986 and 2023 reflecting changes to credit conditions during this period. The government bond represents an investment with zero credit risk.