Series 66: 2.4.9. Yield Spread

2.4.9. Yield Spread

A yield spread is the difference between a bond’s yield and some benchmark yield. Yield spreads are also called credit spreads. The most common spread compares the yield of a bond against the yield of a U.S. Treasury security of a similar maturity. Treasury securities are perceived to be virtually risk-free, so they serve as a useful benchmark against which an investor can compare a bond’s yield. For example, an investor may want to compare the yield of a 10-year corporate bond with that of a 10-year Treasury note.