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What is the credit spread on a corporate bond?
Suggested Answer: C
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37 comments · newest first
GL
Glenna
11 months ago
Wait, so the credit spread is really about risk? Surprising!
DO
Douglass
11 months ago
Definitely not option D, that's just wrong.
MA
Markus
11 months ago
I thought it was just the bid/ask spread, but I guess not?
KA
Kaitlyn
12 months ago
Totally agree, it's all about the credit risk!
TU
Tuyet
1 year ago
It's the difference in yield compared to treasuries, right?
LO
Lore
1 year ago
I vaguely remember something about the bid/ask spread, but that seems more about liquidity. I think the credit spread is more about yield and risk, possibly option C.
JE
Jeanice
1 year ago
I feel like the credit spread has to do with the risk premium investors demand. Option C sounds familiar, but I can't quite recall the details.
AL
Aleshia
1 year ago
I remember practicing a question about comparing corporate bonds to treasuries. I think the credit spread is the difference in yield between them, which might be option B.
IR
Irma
1 year ago
I think the credit spread is related to the yield investors expect to receive, but I'm not sure if it's specifically about the risk.
AR
Arlette
1 year ago
I'm a little confused on this one. Is the credit spread related to the bid-ask spread in the trading price? Or is it something else entirely? I'll have to review my notes to make sure I understand the concept properly.
LA
Lashunda
1 year ago
Okay, I've got this. The credit spread is the additional yield that investors demand to offset the credit risk of the corporate bond compared to a risk-free treasury. That matches option C, the additional yield required by investors to offset the credit risk.
LE
Lennie
1 year ago
Hmm, I'm a bit unsure about this one. I know the credit spread has something to do with the additional yield required for the credit risk, but I'm not totally sure how to calculate it. I'll have to think this through carefully.
GA
Galen
1 year ago
I think the credit spread on a corporate bond is the difference in price between the corporate bond and a benchmark treasury bond. That seems to match option B.
JA
Jacquelyne
1 year ago
I'm a bit confused by the wording of the question. I'll need to read it a few times to make sure I'm interpreting it correctly.
VE
Vernell
1 year ago
Hmm, I'm not sure about this one. I'll have to think it through carefully to make sure I don't miss anything.
NU
Nu
1 year ago
I remember from our clinical protocols that not all PVCs require immediate test stoppage. Context matters - frequency and patient symptoms are key.
ET
Ettie
2 years ago
I heard the credit spread on corporate bonds is just the amount of tears shed by the poor saps who bought them.
LA
Lavera
2 years ago
B) The difference in price between a corporate bond and a benchmark treasury
GO
Golda
2 years ago
C) The additional yield required by investors to offset the credit risk of the security
CH
Chuck
2 years ago
A) The increased size of the bid/ask spread in a trade price
MA
Margot
2 years ago
D? Really? The difference between the coupon rate and the dividend? That's like apples and oranges, man.
LE
Lewis
2 years ago
B) The difference in price between a corporate bond and a benchmark treasury
FA
Fausto
2 years ago
C) The additional yield required by investors to offset the credit risk of the security
LA
Layla
2 years ago
A) The increased size of the bid/ask spread in a trade price
NA
Naomi
2 years ago
Hmm, I'm torn between B and C. I guess I'll go with C, just to be safe. Credit risk, you know?
JO
Joni
2 years ago
I'm torn between B and C. I guess I'll go with C, just to be safe. Credit risk, you know?
LA
Lang
2 years ago
I'm not sure, I thought it was the additional yield required by investors to offset the credit risk of the security.
SL
Slyvia
2 years ago
I think the credit spread is the difference in price between a corporate bond and a benchmark treasury.
SH
Sherly
2 years ago
Definitely B. The difference in price between a corporate bond and a benchmark treasury. Easy peasy!
JU
Juliana
2 years ago
Yes, that's correct. The credit spread reflects the risk of default by the issuer, which is why investors demand a higher yield.
AR
Ariel
2 years ago
Hmm, that makes sense. So it's more about the risk associated with the bond rather than just the price difference?
EL
Ellen
2 years ago
I think the correct answer is C. The additional yield required by investors to offset the credit risk of the security.
LA
Lacey
2 years ago
Agreed. Credit spread is a key factor to consider when evaluating corporate bonds.
EV
Evangelina
2 years ago
That makes sense. It's important for investors to be compensated for taking on that risk.
JA
Janae
2 years ago
I think the correct answer is C. The additional yield required by investors to offset the credit risk of the security.
GE
Gearldine
2 years ago
I disagree, I believe it's the additional yield required by investors to offset the credit risk of the security.
AR
Ariel
2 years ago
I think the credit spread on a corporate bond is the difference in price between the bond and a benchmark treasury.