1. Corporate bond interest rates are a good measure of the interest rate facing firms planning investments. Before the financial crisis, this rate was about 2% higher than the fed funds rate. At the peak of the crisis in October 2008, the Baa rated bond rate was almost 9 percent higher than the fed funds rate.

a) Go to the FRED database and look up the series BAA10Yand extend the data range to “max”. Compare what you see to the TED spread