1.Go to giddy.org/db/corpspreads.htm. the spreads are listed in the form of basis points (100 basis points = 1 percent) above the Treasury security with the same maturity.

Compare the AAA spread for a short-term maturity (such as two years) versus a long-term maturity (such as 10 years).

a. Is the spread larger for the short-term or the long-term maturity?

b. Offer an explanation for this.

2.Review the "Corporate Borrowing Rates and Yields" table in a recent issue of The Wall Street Journal (or a similar paper) to determine the Treasury bond yield. How do these rates compare to the Fannie Mae yield quoted in the Journal's "Borrowing Benchmarks" section? Why do you think there is a difference between the Fannie Mae rate and Treasury bond yields?