Explanation:

• Option A is incorrect because yield spreads typically widen when there is a deterioration in an issuer's credit quality, often referred to as credit migration or downgrade risk.

• Option B is correct because during periods of high demand for corporate bonds, yield spreads tend to tighten as investors are willing to accept lower yields for the same level of risk.

• Option C is incorrect because yield spreads widen when broker-dealers face reduced ability or willingness to make markets, increasing market liquidity risk. This is particularly relevant in over-the-counter markets where broker-dealers play a critical role in maintaining liquidity.

This question aligns with the CFA exam's focus on understanding macroeconomic, market, and issuer-specific factors that influence yield spreads.