Asked by terra
At any given time how would the yeild curve facing a AAA-rated company compare with the yield curve for u.s. treasury securities? At any given time how would the yield curve facing a BB-rated company compare with the yield curve u.s. treasury securities. Dr a graph to illustrate your answer.
Answers
Answered by
economyst
I presume you mean the yield of purchasing a bond from a AAA company.
US securities are the least risky and therefore have the lowest yield. AAA are slightly more risky, and so (ignoring risk) have a slightly higher yield. BB companies are substantially more risky and ergo have a substantially higher yield.
US securities are the least risky and therefore have the lowest yield. AAA are slightly more risky, and so (ignoring risk) have a slightly higher yield. BB companies are substantially more risky and ergo have a substantially higher yield.
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