ABBB-rated corporate bond has a yield to maturity of 12.8 %

12.8%. A U.S. treasury security has a yield to maturity of 11.4 %

11.4%. These yields are quoted as APRs with semiannual compounding. Both bonds paysemi-annual coupons at a rate of 11.5 %

11.5% and have five years to maturity.

a. What is the price(expressed as a percentage of the facevalue) of the treasurybond?

b. What is the price(expressed as a percentage of the facevalue) of theBBB-rated corporatebond?

c. What is the credit spread on the BBBbonds?