11 chapt 6/7

A BBB-rated corporate bond has a yield to maturity of 10.5%. A U.S. treasury security has a yield to maturity of 8.8%. These yields are quoted as APRs with semiannual compounding. Both bonds pay semi-annual coupons at a rate of 9.0% 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