The spread between Treasury securities and non-Treasury securities that are identical in all respects except for quality is referred to as:
A) Risk premium.
B) Quality spread.
C) Income spread.
D) Credit spread.
E) b and d only.

Question

Quizplus · Accepted Answer

The spread between Treasury securities and non-Treasury securities that are identical in all respects except for quality is referred to as both a quality spread and a credit spread. The term "quality spread" directly refers to the difference in quality between two securities, while "credit spread" refers to the difference in yield, which is influenced by the credit quality of the issuers.

The Spread Between Treasury Securities and Non-Treasury Securities That Are