A BBB-rated corporate bond has a yield to maturity of

5.1%.

A U.S. Treasury security has a yield to maturity of

3.7%.

These yields are quoted as

APRs

with semiannual compounding. Both bonds pay semi-annual coupons at a rate of

4.1%

and have

5

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?