The yield on a company's five-year bonds is 5%. The five year swap rate is 4.5% and the five-year Treasury rate is 4%. What would be closest to your best estimate of the five-year CDS spread
A. 200 basis points
B. 150 basis points
C. 100 basis points
D. 50 basis points
D
The best estimate is the excess of the bond yield over the swap rate or about 50 basis points.
You might also like to view...
Which of the following is an ERP add on system that organizes data by product, including designs, manufacturing specifications, quality and warranty performance?
a. product lifecycle management b. throughput c. push manufacturing d. pull manufacturing
The statement of cash flows summarizes the operating, investing, and financing activities of a business for a period of time
a. True b. False Indicate whether the statement is true or false
Words that draw mental pictures for the reader are good to use
Indicate whether the statement is true or false.
Which type of corporation strives for efficiency across all of its markets and treats the world market as an integrated whole?
a. Global b. National c. International d. Multinational