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A BBB-rated corporate bond has a yield to maturity of 11.8%. AU.S. Treasury security has a yield to maturity of 10.5%. These yields are
A BBB-rated corporate bond has a yield to maturity of 11.8%. AU.S. Treasury security has a yield to maturity of 10.5%. These yields are quoted as APRS with semiannual compounding. Both bonds pay semiannual coupons at an annual rate of 11.1% 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? a. What is the price (expressed as a percentage of the face value) of the Treasury bond? The price of the Treasury security as a percentage of face value is %. (Round to two decimal places.) b. What is the price (expressed as a percentage of the face value) of the BBB-rated corporate bond? The price of the BBB-rated corporate bond as a percentage of face value is %. (Round to two decimal places.) c. What is the credit spread on the BBB bonds? The credit spread on the BBB bonds is %. (Round to two decimal places.)
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