Economics Bonds Questions
Bond yield spread analysis is a method used to evaluate the relative risk and return of different bonds by comparing their yields. It involves calculating the difference in yields between two bonds with similar characteristics but different credit ratings or maturities. The bond yield spread represents the additional compensation investors require for taking on the additional risk associated with the lower-rated bond or longer maturity. This analysis helps investors assess the creditworthiness and market perception of risk for different bonds, allowing them to make informed investment decisions.