1)According to an article on the junk bond market in Europe published in Economist in 2016, "The spread (the interest premium over government borrowing rates) paid by junk-bond issuers has risen by nearly three and a half percentage points since March last year."

a.How can you tell whether a newly issued bond is a junk bond?

b.Why would the spread between government bonds and junk bonds have been rising?

c.Draw a demand/ supply graph for junk bonds and government bonds to demonstrate.

d.Does this increase in the spread make junk bonds a better or worse investment compared with buying government-issued bonds? Briefly explain.