2. You observe the following yields on the market:
10-year Indian bond issued in local currency: 8%
8-year Indian bond issued in US dollar: 6%
10-year US bond issued in US dollar: 4%
8-year US bond issued in US dollar: 3%
Which of the following statement is/are true?
- You do not have enough information at your disposal to adequately compute the 10-year Indian-US yield spread.
- You have enough information to adequately compute the 8-year Indian-US yield spread.
- The 10-year Indian-US yield spread stands at 40 basis points.
- The 8-year Indian-US yield spread stands at 3% and suggests that 8-year Indian bonds are riskier than 8-year US bonds.
