What is the credit spread on the bbb bonds

Reference no: EM132195951

Question - A BBB-rated corporate bond has a yield to maturity of 5.3%. A U.S. treasury security has a yield to maturity of 3.8%. These yeas are quoted as APRs with semiannual compounding. Both bonds pay semi-annual coupons at a rate of 4.1% and have five years to maturity.

a. What is the price (expressed as a percentage of the face value) of the treasury bond?

b. What is the price (expressed as a percentage of the face value) of the BBB-rated corporate bond?

c. What is the credit spread on the BBB bonds?

Reference no: EM132195951

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