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You observe the following yields on the market:

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.