Series 7: 2.7.2 Yield Spread

2.7.2  Yield Spread

Yield spread is the difference between a bond’s yield and some benchmark yield. The most common spread compares the yield of a bond against the yield of a U.S. Treasury security of a similar maturity. Treasury securities are perceived to be virtually risk-free, so they serve as a useful benchmark to compare a bond’s yield to. For example,