Answer to Question #72063 in Economics of Enterprise for Karun Ghimire

Question

Explain th economic impact of narrowing yield gap - he difference between the 90 day Bill rate and the 10yr bond rate

Answer 1

The yield gap or yield ratio is the ratio of the dividend yield of an equity and the yield of a long-term government bond. Typically equities have a higher yield (as a percentage of the market price of the equity) thus reflecting the higher risk of holding an equity.
Reference:
https://en.m.wikipedia.org/wiki/Yield_gap