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Question Help The following table summarizes the yields to maturity on several one-year, zero-coupon securities: Security Yield (%) Treasury 3.11 AAA corporate 3.19 BBB corporate

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Question Help The following table summarizes the yields to maturity on several one-year, zero-coupon securities: Security Yield (%) Treasury 3.11 AAA corporate 3.19 BBB corporate 4.22 B corporate 4.93 a. What is the price (expressed as a percentage of the face value) of a one-year, zero-coupon corporate bond with a MA rating? b. What is the credit spread on MA rated corporate bonds? c. What is the credit spread on B-rated corporate bonds? d. How does the credit spread change with the bond rating? Why? 2. What is the price (expressed as a percentage of the face value) of a one-year, zero-coupon corporate bond with a AAA rating? The price of this bond will be %. (Round to three decimal places) Ims. b. What is the credit spread on AAA-rated corporate bonds? Fin301 The credit spread on AAA-rated corporate bonds is 0% (Round to two decimal places.) c. What is the credit spread on B-rated corporate bonds? The credit spread on B-rated corporate bonds is (). (Round to two decimal places.) Click to select your answers) 193 d. How does the credit spread change with the bond rating? Why? (Select the best choice below.) ms. 1301 A. The credit spread increases as the bond rating rises because higher rated bonds are riskier. O B. The credit spread decreases as the bond rating rises because higher-rated bonds are riskier. OC. The credit spread increases as the bond rating falls because lower-rated bonds are riskier, OD. The credit spread decreases as the bond rating falls because lower-rated bonds are riskier. Click to select your answer(s). Term 193 Semester 2019/20

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