Security Term (years) Yield (%) Treasury 20 0

Finance Mar 19, 2021

Security Term (years) Yield (%) Treasury 20 0.4 AAA Corporate 20 1.9 AA Corporate 20 3.9 A Corportae 20 6.1 BBB Corporate 20 8.0
The credit spread on AA-rated corporate bonds is %

Expert Solution

Computation of Credit spread on AA-rated corporate bond :

Credit spread on AA-rated corporate bond = Yield on AA-rated corporate bond - Yield on treasury bond

= 3.9% - 0.4%

= 3.5%

So, Credit spread on AA rated corporate bond in % is 3.5.

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