Question

In: Finance

A term spread is the difference between the rate on the 10 year treasury bond and...

A term spread is the difference between the rate on the 10 year treasury bond and a 30 year corporate bond

TRUE OR FALSE

Solutions

Expert Solution

The term Term Spread is used to compare and evaluate the Interest. It is the difference of the interest between different maturities od securities issued by different entities. It is also known as the slope of the bond yield curve.

So the statement in TRUE.

NOTE: The answer to your question has been given below/above. If there is any query regarding the answer, please ask in the comment section. If you find the answer helpful, do upvote. Help us help you.


Related Solutions

the difference between the 30 year mortgage rate and the 30-year treasury bond rate is primary...
the difference between the 30 year mortgage rate and the 30-year treasury bond rate is primary attribute to a. interest rate risk b. reinvestment rate risk c. credit risk d. insurance risk
Was 10-year Treasury bond called Treasury Bill, Note, or Bond? What was the term ... that...
Was 10-year Treasury bond called Treasury Bill, Note, or Bond? What was the term ... that indicates the situation in which the yield of Treasury bonds sharply decreases because U.S. Treasury bonds are the safest assets? What is the meaning of finance? Is it not a gamble to earn more money using some seed money?
•Note the following yields: 10 year treasury 2.37%, 10 year AAA rated bond credit spread 0.90%...
•Note the following yields: 10 year treasury 2.37%, 10 year AAA rated bond credit spread 0.90% (90 basis points), BBB rated bond credit spread 1.20% (120 basis points). What is the price of a 10 year bond, $1000 par value, with a coupon rate of 6% that pays interest semi-annually and has risk similar to a BBB rated corporate bond? •Suppose Company X has earnings next year of $1.00 and grows earnings by 40% for 2 years and will grow...
A 5-year Treasury bond has a 3.7% yield. A 10-year Treasury bond yields 7%, and a...
A 5-year Treasury bond has a 3.7% yield. A 10-year Treasury bond yields 7%, and a 10-year corporate bond yields 8.5%. The market expects that inflation will average 3% over the next 10 years (IP10 = 3%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities:...
A 5-year Treasury bond has a 4.8% yield. A 10-year Treasury bond yields 6.95%, and a...
A 5-year Treasury bond has a 4.8% yield. A 10-year Treasury bond yields 6.95%, and a 10-year corporate bond yields 9%. The market expects that inflation will average 2.55% over the next 10 years (IP10 = 2.55%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities:...
Find the corporate yield spread if the 8-year Treasury rate is 3% and the 8-year corporate...
Find the corporate yield spread if the 8-year Treasury rate is 3% and the 8-year corporate bond rate is 8%.
why has the 10-year treasury bond rate fallen ? As of 12/31/19 it was 1.92, and...
why has the 10-year treasury bond rate fallen ? As of 12/31/19 it was 1.92, and today it is around 0.81. hat has been the corresponding effect on its price?
why has the 10-year treasury bond rate fallen ? As of 12/31/19 it was 1.92, and...
why has the 10-year treasury bond rate fallen ? As of 12/31/19 it was 1.92, and today it is around 0.81. Explain?
What would be the interest rate on a 10-year Treasury bond, given the following information? kpr...
What would be the interest rate on a 10-year Treasury bond, given the following information? kpr = 2% MR = 0.1% for a 1-year loan, increasing by 0.1% each additional year. LR = 0.5% DR= 0 for a 1-year loan, 0.1% for a 2-year loan, increasing by 0.1% for each additional year. Expected inflation rates: Year 1 = 3.0% Year 2 = 4.0% Year 3 and thereafter: 5.0% 6.7% 9.1% 7.7% 8.9%
What is a swap spread? The difference in yield between the fixed rate on a swap...
What is a swap spread? The difference in yield between the fixed rate on a swap and the yield of an equal maturity US Treasury. The difference in yield on LIBOR and the fixed rate on a swap. The difference in yield on SOFR and LIBOR. The difference in yield between a “BBB” rated corporate bond and the payments in a CDS contract on that corporation. The difference in yield between LIBOR and 90-day T-Bills.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT