30. A BBB-rated corporate bond has a yield to maturity of 8.5%. A U.S. Treasury security has...
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30. A BBB-rated corporate bond has a yield to maturity of 8.5%. A U.S. Treasury security has a yield to maturity of 6.8%. These yields are quoted as APRS with semiannual compounding. Both bonds pay semiannual coupons at a rate of 5% and have eight 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?
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Related Book For 
Fundamentals Of Corporate Finance
ISBN: 9781292018409
3rd Global Edition
Authors: Berk, Peter DeMarzo, Jarrad Harford
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