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-The above table shows the yields to maturity on a number of one-year, zero-coupon securities. What is the credit spread on a one-year, zero-coupon corporate bond with a B rating?

Question

Use the information for the question(s)below. 
-The above table shows the yields to maturity on a number of one-year, zero-coupon securities. What is the credit spread on a one-year, zero-coupon corporate bond with a B rating?

Quizplus · Accepted Answer

The credit spread is the difference in yield between a corporate bond and a Treasury bond of the same maturity. Given a B-rated corporate bond yield of 7.4% and a Treasury bond yield of 5.7%, the credit spread is 7.4% - 5.7% = 1.7%.

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