Your firm has a credit rating of AA. You notice that the credit spread for 10-year maturity AA debt is 0.90%.
In the bond market, this would be quoted as “90 basis points.” (A basis point is 0.01%, or one one hundredth of a percent.). Your firm’s 10-year debt has a coupon rate of 5%. You see that new 10-year Treasury notes are being issued at par with a coupon rate of 4.5%. What should be the price of your outstanding 10-year bonds?