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Why is the treasury curve upward-sloping

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Seadrill is a single-B rated owner and operator of semi-submersible rigs, deep-water drilling ships and jack-ups used in drilling for offshore oil and gas. Procter & Gamble, rated triple-A, makes consumer products like band-aids. Consider the yield to maturity on the following bonds:

Maturity Seadrill P&G U.S. Treasuries

2 yrs 18% 0.60% 0.35%

10-yrs 10% 1.55% 0.85%

  1. Why is the Treasury curve upward-sloping?
  2. What are the credit spreads of P&G and why are they upward sloping?
  3. What are the credit spreads of Seadrill and why are they downward sloping?

Reference no: EM133056853

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