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Spread to Treasuries

Categories: Investing, Metrics, Bonds

Ever wonder how bonds get priced? It sure ain't random.

It happens through a spread to treasury, which is the yield difference between a a U.S. Treasury security and a similar bond. U.S. Treasury securities are considered to have pretty much zero risk, so if a U.S. Treasury is yielding 4%, a bond from a private company could yield maybe 14% because (duh) it's a much higher risk. 

Find other enlightening terms in Shmoop Finance Genius Bar(f)