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Basic Question 13 of 14

A five-year, 2.5% T-bond is selling for $100.56, while a five-year, 4% bond issued by GM is selling for $103.74. Assume annual compounding, the G spread on the GM bond is closest to ______.

A. 150 basis points
B. 80 basis points
C. 218 basis points
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User Contributed Comments 3

User Comment
kai666 Further explanation on how to get the 2.38 and 3.18 percent?
shoemets Look at earlier question explanations
praj24 N=10, FV = 100, PMT= 1.25, PV = -100.56 CPT I/Y = 1.19026 x 2 = 2.38%

N=10, FV = 100, PMT = 2, PV = -103.74 CPT I/Y = 1.59246 x 2 = 3.18%

3.18 - 2.38 = 80bps

Simples
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Learning Outcome Statements

compare, calculate, and interpret yield and yield spread measures for fixed-rate bonds

CFA® 2025 Level I Curriculum, Volume 4, Module 7.