Assume you are looking at the following bonds for purchase:

Bond A: 5 year US Treasury Note @ 3.25% YTM

Bond B: 10 year US Treasury Note @ 3.50% YTM

Bond C: 5 year BBB rated Non-Callable Corporate Bond @ 4.85% YTM

Bond D: 10 year AA rated Non-Callable Corporate Bond @ 4.35% YTM

Bond E: 10 year Agency Callable in 5 years @ 4.40% YTC | 4.75% YTM

If the credit rating of the 5 year BBB rated Non-Callable Corporate Bond (Bond C) gets upgraded to A, Bond Cs spread will likely _________ and (assuming Treasury Rates remain unchanged) Bond Cs YTM will likely _________.

Select One

a) Increase | Increase

b) Decrease | Increase

c) Increase | Decrease

d) Decrease | Decrease