n NISM Certifications
XXI NISM Series XXI-A
Medium

If a 3-year Government of India Bond is yielding 5% and a 10-year Government of India Bond is yielding 9%, the difference between the interest rate of two different time periods is known as ______.

Practice question from NISM XXI A for PMS - Mock Test 6 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Sovereign spread

  2. B

    Default spread

  3. Term spread

    Correct answer

  4. D

    Both Term spread and Default spread

Why this is the answer

Difference in yields between bonds of different maturities reflects the term spread.

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