HMK Enterprises would like to raise $9 million to invest in capital expenditures. The company plans to issue five-year bonds with a face value of $1,000 and a coupon rate of 10.4% (annual payments). The following table summarizes the yield to maturity for five-year (annual-pay) coupon corporate bonds of various ratings. Rating YTM (%) AAA 9.8 10.0 10.4 BBB 10.7 BB 11.0 a. Assuming the bonds will be rated AA, what will the price of the AA-rated bonds be? b. How much total principal amount of these bonds must HMK issue to raise $9 million today, assuming the bonds are AA rated? (Because HMK cannot issue a fraction of a bond, assume all fractions are rounded to the nearest whole number.) c. What must the rating of the bonds be for them to sell at par? d. Suppose that when the bonds are issued, the price of each bond is $977.82. What is the likely rating of the bonds? Are they junk bonds? Note: Assume annual compounding. A BBB-rated corporate bond has a yield to maturity of 12.6%. AU.S. Treasury security has a yield to maturity of 10.8%. These yields are quoted as APRs with semiannual compounding. Both bonds pay semiannual coupons at an annual rate of 11.3% 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 security as a percentage of face value is %. (Round to two decimal places.)