Reading 22 - Fixed Income PM - Part II - Example 20 (Breakeven Spread Analysis)

“Assuming that the increase in price caused by the spread widening…”

If yield goes down, price goes up. If spreads widen, that should mean overall yields are going up. With overall yields going up, price should come down.

Shouldn’t the spread be narrowing in that question, so that yield falls and price increases?

they are trying to look at how much the yield can go up - to wipe out the spread advantage of the bond invested in.