CFA Level I · CFA Level I Exam · Credit Analysis for Corporate Issuers
A corporate bond has a yield to maturity of 5.60% and a comparable-maturity government benchmark yields 3.85%. The bond's yield spread is closest to:
The yield spread is about 1.75%. It is the corporate bond's yield of 5.60% minus the comparable government benchmark yield of 3.85%, which measures the extra compensation for credit, liquidity and other risks beyond the benchmark.
- A1.75%Correct
- B3.85%
- C9.45%
Explanation
Yield spread = 5.60% - 3.85% = 1.75%. Adding the yields gives 9.45%, which is wrong. The benchmark yield alone, 3.85%, is not a spread.
Did you get it right without looking?
One question tells you little. A timed set on Credit Analysis for Corporate Issuers shows your real accuracy, how long you take and where you lose marks.
More Credit Analysis for Corporate Issuers questions
- In a corporate bankruptcy that follows the absolute priority of claims, which of the following creditors is most likely to be paid first fro…
- Which of the following industry factors would an analyst most likely consider when evaluating an issuer's capacity?
- A company reports EBITDA of 360, depreciation and amortization of 120, and interest expense of 80. Its EBIT coverage and EBITDA coverage of …
- In credit analysis of a corporate issuer, the four Cs are capacity, collateral, covenants and character. Which of these is most likely asses…
- When analyzing a corporate issuer, an analyst adds capitalized operating lease obligations to reported debt. This adjustment will most likel…
- Which of the following is most likely a feature of the character component when analyzing a corporate issuer's credit quality?