What analysis does a spread curve assist with?

A spread curve is primarily used in bottom-up relative value analysis. This form of analysis focuses on comparing the pricing of various securities against one another to identify undervalued or overvalued assets based on their yield spreads relative to benchmarks, such as government bonds or other relevant securities. The spread curve illustrates the relationship between the yields of different securities across various maturities or credit qualities, helping analysts assess market expectations and risk premiums.

By analyzing the spread curve, investors can identify opportunities for investment by looking for securities that may offer better value compared to similar assets. This type of analysis is crucial for portfolio managers and analysts who aim to optimize their holdings based on comparative value rather than macroeconomic or top-level strategic considerations. Thus, the correct answer reflects the utilization of spread curves in identifying relative value opportunities through detailed analysis of security spreads.