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Credit Spread Formula

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Credit Spread refers to the difference in yield or interest rate between two debt securities with similar maturities but differing credit qualities. Check FAQs

CS P = CBY - TBY

CS_P - Credit Spread?CBY - Corporate Bond Yield?TBY - Treasury Bond Yield?

Credit Spread Example

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With units

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Here is how the Credit Spread equation looks like with Values.

Here is how the Credit Spread equation looks like with Units.

Here is how the Credit Spread equation looks like.

0.54 = 2.5 - 1.96

0.54 = 2.5 - 1.96

0.54 = 2.5 - 1.96

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Credit Spread Solution

Follow our step by step solution on how to calculate Credit Spread?

FIRST Step Consider the formula

CS P = CBY - TBY

Next Step Substitute values of Variables

∴

CS P = 2.5 - 1.96

Next Step Prepare to Evaluate

∴

CS P = 2.5 - 1.96

LAST Step Evaluate

∴

CS P = 0.54

Credit Spread Formula Elements

Variables

Credit Spread

Credit Spread refers to the difference in yield or interest rate between two debt securities with similar maturities but differing credit qualities.

Symbol: CS_P

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Credit Spread

Corporate Bond Yield

Corporate Bond Yield refers to the rate of return or interest rate that investors earn from investing in a corporate bond.

Symbol: CBY

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Corporate Bond Yield

Treasury Bond Yield

Treasury Bond Yield refers to the rate of return or interest rate that investors earn from investing in a government-issued treasury bond.

Symbol: TBY

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Treasury Bond Yield

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How to Evaluate Credit Spread?

Credit Spread evaluator uses Credit Spread = Corporate Bond Yield-Treasury Bond Yield to evaluate the Credit Spread, Credit Spread refers to the disparity in yield, or return, between two debt instruments of the same maturity but possessing different credit ratings. Credit Spread is denoted by CS_P symbol.

How to evaluate Credit Spread using this online evaluator? To use this online evaluator for Credit Spread, enter Corporate Bond Yield (CBY) & Treasury Bond Yield (TBY) and hit the calculate button.

FAQs on Credit Spread

What is the formula to find Credit Spread?

The formula of Credit Spread is expressed as Credit Spread = Corporate Bond Yield-Treasury Bond Yield. Here is an example- 0.54 = 2.5-1.96.

How to calculate Credit Spread?

With Corporate Bond Yield (CBY) & Treasury Bond Yield (TBY) we can find Credit Spread using the formula - Credit Spread = Corporate Bond Yield-Treasury Bond Yield.

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Credit Spread Formula

Credit Spread Example

Credit Spread Solution

Credit Spread Formula Elements

Other formulas in Risk Management category

How to Evaluate Credit Spread?

FAQs on Credit Spread

Variable Name