Suppose you observed that 1-year AAA-rated government bonds are trading with a YTM of 5.75%. The yield spread between AAA- and BB-rated corporate bonds is 170 basis points. The maturity yield differential between the 1-year and 3-year government bonds is 55 basis points. 1. What is the market yield you would expect on a 3-year, BB-rated corporate bond that pays a 7.5% annual coupon? (3 marks) 2. How much would you pay for this 3-year, BB-rated corporate bond? (3 marks)