In the May 29, 1992, Weekly Market Update published by Goldman, Sachs & Co., the following information was reported in vari- ous exhibits for certain corporate bonds as of the close of business Thursday, May 28, 1992:

a. What does rating mean?

b. Which of the five bonds has the greatest credit risk?

c. What is meant by spread?

d. What is meant by Treasury benchmark?

e. Why do each of the spreads reported reflect a risk premium?AppendixLO1

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Spread Issuer Rating Yield (%) (basis points) Treasury Benchmark (years) General Electric Capital Co Triple A 7.87 50 10 Mobil Corp Double A 7.77 40 10 Southern Bell Tel & Teleg Triple A 8.60 72 30 Bell Tel Co Pa Double A 8.66 78 30 AMR Corp Triple B 9.43 155 30