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?