4. Suppose Verizon bonds are currently rated AAA, and AT&T bonds are rated BBB. Also suppose price of a $100 face-valued one-year AT&T bond is $95. As for Verizon bonds, all we know is that their face value is the same as AT&T bonds.

a. What is the interest rate the AT&T bond?

b. Even though we have limited information Verizon bonds, can you speculate whether price of $100 face-value Verizon bond is higher, lower or the same as AT&T bond? Why?

c. Similarly, do you think interest rate on $100 face-value Verizon bond is higher, lower or the same as AT&T Bond and why?