Bond Yields
A credit spread measures the difference between yields on:
Credit spread = corporate yield minus Treasury yield. Widens in economic uncertainty.
Complete Analysis & Legal Rationale
A credit spread (yield spread) measures the difference between the yield on a corporate bond and a risk-free government security of similar maturity. It represents the additional yield investors demand for taking on credit risk.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
This describes the yield curve or term spread, not a credit spread.
Matches the verified teaching point in the explanation.
This is not how credit spreads are calculated.
Credit spreads relate to fixed-income securities, not equity dividends.
Official Standard: Governs options accounts, approvals, and related supervisory requirements (verify current text).
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.