The spread component of a specific bond's yield-to-maturity is least likely impacted by changes in:
A) its tax status.
B) its quality rating.
C) inflation in its currency of denomination.

Question

Quizplus · Accepted Answer

The spread component of a bond's yield-to-maturity is primarily affected by the credit risk and tax status of the bond, not by inflation in its currency of denomination. Inflation impacts the nominal interest rates or the overall yield levels in the economy, but the spread is more about the differential over a benchmark rate, reflecting credit risk and tax implications rather than general economic conditions like inflation.

The Spread Component of a Specific Bond's Yield-To-Maturity Is Least