Interest Rates for Corporate Bonds and Ten-Year Treasury Bonds

A bond is a promise to repay borrowed money with interest. The United States government is the safest borrower there is, so its ten-year notes pay the lower of these two rates. Corporations, even highly rated ones, can default, so they must offer more to attract the same lenders.

The two lines move together because both respond to the same conditions in financial markets, but the corporate line never crosses below. The gap between them is the price of default risk, and it widens when lenders turn cautious. The slider reads both rates at a chosen year and reports the gap; the values are sampled from the book's figure.