Question

The TED spread is: Group of answer choices

A. the spread the spread between the interest rate of long and short run corporate debt
B. a measurement of a Treasury security's maturity adjusted for the coupon rate
C. the spread between the interest rate of long and short run Treasury securities
D. the spread between the interest rate on a Treasury security and the LIBOR rate

Answer 1

The TED spread is the spread between the interest rate on a Treasury security and the LIBOR rate. It is a benchmark for short-term interest rates. By comparing the TED spread to historical values, analysts can gain insights into the perceived credit risk in the financial markets.

Step-by-step explanation:

The TED spread is the spread between the interest rate on a Treasury security and the LIBOR rate.

The LIBOR rate is the rate at which banks lend to each other in the London interbank market. It is a benchmark for short-term interest rates.

By comparing the TED spread to historical values, analysts can gain insights into the perceived credit risk in the financial markets.