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

8.7%.

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

6.8%.

These yields are quoted as

APRs

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

7.0%

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 corporatebond?

c. What is the credit spread on the BBB bonds?

A BBB-rated corporate bond has a yield to maturity of 8.7%. A U.S. treasury security has a yield to maturity of 6.8%. These yields are quoted as APRs with semiannual compounding. Both bonds pay semi-annual coupons at a rate of 7.0% 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 bond as a percentage of face value is %. (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 %. (Round to three 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.)