Question
You are trying to find the correct yield difference between a 15-year maturity bond rated A, and a 15-year maturity bond rated AAA. You find
You are trying to find the correct yield difference between a 15-year maturity bond rated A, and a 15-year maturity bond rated AAA. You find that a 15-year maturity, AA rated bonds yield is 75 basis points greater than a AAA rated bond, while that of a 15-year maturity A- rated bonds yield is 90 basis points greater. Which of the following should be a possibility for the yield difference of the A rated bond? (100 basis point equals 1%. No calculations needed.)
options:
| 74 basis points |
| 80 basis points |
| 90 basis points |
| both b and c are possible spreads for the bond |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started