Suppose there's a corporate bond with face value of $1000 and coupon rate 4% annually that had an original maturity of 10 years. The bond is now two years old and sells for $616.

a. An analyst expects that the bond will only pay out 80% of its promised CFs each year. What should the analyst use as the bond's YTM?

b. If a UST note with the same remaining maturity has a YTM of 2%, what is the yield spread over the Treasury.