Question
A BBB-rated corporate bond has a yield to maturity of 11.7 % . A U.S. treasury security has a yield to maturity of 9.9 %
A BBB-rated corporate bond has a yield to maturity of 11.7 % . A U.S. treasury security has a yield to maturity of 9.9 % . These yields are quoted as APRs with semiannual compounding. Both bonds pay semi-annual coupons at a rate of 10.0 % and have five years to maturity.
a. What is the price (expressed as a percentage of the face value) of the treasury bond? The price of the treasury bond as a percentage of face value is nothing %. (Round to three 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 nothing %. (Round to three decimal places.)
c. What is the credit spread on the BBB bonds? The credit spread on the BBB bonds is nothing %. (Round to two decimal places.)
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International Financial Management
Authors: Jeff Madura
3rd Edition
0314862722, 978-0314862723
