medium · Debt Capital Markets pricing-yields-curve
Which of the following best defines the Z-spread of a corporate bond?
- The difference between the bond's yield to maturity and the yield of a single on-the-run government benchmark.
- The spread over the benchmark swap rate at the bond's interpolated maturity.
- The spread remaining after stripping out the value of an embedded call option.
- The constant spread added to the entire benchmark spot curve that equates the present value of cash flows to the market price.
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