How do I calculate yield spread with examples?
An example of an AI chatbot conversation about calculating yield spread with practical examples.
How do I calculate yield spread with examples?
To calculate yield spread, you subtract the yield of one bond from another. For example, if Bond A has a yield of 5% and Bond B has a yield of 3%, the yield spread is 5% - 3% = 2%.
Can you give me another example?
Sure! If you have a corporate bond yielding 6% and a government bond yielding 4%, the yield spread would be 6% - 4% = 2%.
What does a higher yield spread indicate?
A higher yield spread typically indicates greater risk associated with the bond, as investors demand more return for taking on additional risk.
Are there any factors that affect yield spreads?
Yes, factors like credit risk, interest rates, and economic conditions can all influence yield spreads.
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