First blog post

This is my very first blog post. The graphs depicts the yield spread between corporate and Treasury debt for 3 credit ratings. The credit spread puzzle refers to the large yield difference between corporate and Treasury debt given that actual default probabilities are low for investment grade firms.

My first publication The Levered Equity Risk Premium and Credit Spreads provides a rational explanation for the large yield difference based on macroeconomic risk and recursive preferences. CreditRisk

 

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