The global credit crisis became globally visible in September 2007. Interest rates, particularly the extremely short-term interest rates, will often change quickly (typically up) as indications that markets are under severe stress. The interest rates shown here are for selected dates in September and October 2008. Different publications define the TED Spread different ways, but one measure is the differential between the overnight LIBOR interest rate and the 3-month U.S. Treasury bill rate.

a. Calculate the spread between the two market rates shown here in September and October 2008.

b. On what date is the spread the narrowest? The widest?

c. When the spread widens dramatically, presumably demonstrating some form of financial anxiety or crisis, which of the rates moves the most and why?