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10) 10 pts. Suppose Wikileaks releases previously secret financial information about all companies that have issued bonds and makes the information available to everyone. Wikileaks
10) 10 pts. Suppose Wikileaks releases previously secret financial information about all companies that have issued bonds and makes the information available to everyone. Wikileaks will continue to release such information in the future. The information is relevant for assessing the probability that a company will default on its bonds. For some bonds, the information tends to raise one's estimate of default probability; for other bonds, it tends to reduce one's estimate of default probability. Before Wikileaks released the information, everyone knew the information existed and knew some people had it, but only a few people had the information. Consider the average spread between all corporate bonds and Treasury bonds of matching maturities. Will the Wikileaks information tend to increase, decrease, or have no effect on this average spread? Explain
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