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Liquidity of these bond classes during a credit crisis

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A hedge fund specializing in locating attractively priced fixed-income instruments, Millennium Cerberus Fund is now reviewing its overall bond allocation strategy following the recent liquidity squeeze in the financial markets. Consider three classes of traditional fixed-income vehicles: Treasury bonds, high-grade corporate bonds, and low-grade corporate bonds. In "normal" market conditions, would you expect the liquidity of all these bond classes to be the same? What would you expect to happen to the liquidity of these bond classes during a credit crisis, such as the one we experienced in 2008?

Reference no: EM132404587

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