Default premium

• A differential in promised yield that compensates the investor for the risk inherent in purchasing a corporate bond that entails some risk of default.

• Default Premium is the promised payment times the probability of default. To calculate the default premium we can compare the yield on the bonds with the yield on risk-free Treasury bonds with the same maturity. For instance, if some bonds yield 11%, and the same maturity Treasury bonds yield 10%, then the default premium is 1%.

 Embedded terms in definition
Corporate bond
Treasury bond
 Related Terms

<< Default Default risk >>

Helping Disabled or Elderly Relatives With Money Management, Even From Far Away: Millions of people serve as financial caregivers for ill or elderly spouses, parents, children or other loved ones. They perform services that include paying bills, handling deposits and investments, filing insurance claims and preparing taxes. Because this role can be costly and physically and emotionally exhausting, especially for a caregiver who lives far away or has the usual time-demands, FDIC Consumer News offers some suggestions. More...

Character cannot be developed in ease and quiet. Only through experiences of trial and suffering can the soul be strengthened, vision cleared, ambition inspired and success achieved. Helen Adams Keller


Copyright 2009-2019 GVC. All rights reserved.