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Credit Analysis - Spreads: Use the information below to answer both questions. Show your work. Rating Yield US Treasury Note due 2027 AAA 3.00% Cheeter

Credit Analysis - Spreads:

Use the information below to answer both questions. Show your work.

Rating Yield

US Treasury Note due 2027 AAA 3.00%

Cheeter Inc. Senior Notes due 2027 BBB 4.75%

Adelphio Inc. Senior Notes due 2027 BB 5.50%

a. What is the credit spread to treasuries (in basis points) of Adelphio bonds due 2027?

b. Is Adelphios treasury credit spread higher or lower than Cheeters treasury credit spread? Why?

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