The yield on a company's five-year bonds is 5%.The five year swap rate is 4.5% and the five-year Treasury rate is 4%.What would be closest to your best estimate of the five-year CDS spread

Name: The yield on a company's five-year bonds is 5%.The five year swap rate is 4.5% and the five-year Treasury rate is 4%.What would be closest to your best estimate of the five-year CDS spread
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Question

Quizplus · Accepted Answer

The best estimate is the excess of the bond yield over the swap rate or about 50 basis points.

The Yield on a Company's Five-Year Bonds Is 5