Yield spread

For fixed income securities, the yield spread of a bond is the difference between its yield-to-maturity and the benchmark yield.

Yield spread = Yield-to-maturityBenchmark yield

The spread is affected by microeconomic factors such as the credit risk of the issuer, its credit ratings, liquidity of the bond, and tax status of the bond.

Types: Benchmark spread, G-spread, I-spread

See also: Risk premium

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