Credit spread is the difference in yield between the corporate bond and a Government bond of similar maturity or duration (e.g. for US Dollar corporates, US Treasury bonds). It is essentially the extra yield an investor earns over a risk free instrument as a compensation for the extra risk: thus, the better the quality of the bond, the smaller the spread between its required return and the yield to maturity (YTM) of the benchmark; see #Risk analysis below. This increased required return is then used to discount the bond's cash flows, using the present value formula for bonds, to obtain the bond's price.