Question
ABBB-rated corporate bond has a yield to maturity of 8.3 % A U.S. treasury security has a yield to maturity of 6.9 %. These yields
ABBB-rated corporate bond has a yield to maturity of 8.3 % A U.S. treasury security has a yield to maturity of 6.9 %. These yields are quoted as APRs with semiannual compounding. Both bonds paysemi-annual coupons at a rate of 7.3 % 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?
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Practical Financial Management
Authors: William R. Lasher
6th Edition
1439080496, 978-1439080498
