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The $1,000 bonds of Westpac, issued 3 years ago with a coupon rate of 4.4% paid semi-annually, currently have a yield-to-maturity of 4.51%, which means
The $1,000 bonds of Westpac, issued 3 years ago with a coupon rate of 4.4% paid semi-annually, currently have a yield-to-maturity of 4.51%, which means they are trading for $992.02. At the same time, Treasury bonds with the same term to maturity are trading for $1,107.49, which means they have a yield-to-maturity of 0.77%. Considering this information, what is the credit spread on Westpac bonds?
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0.77%
4.51%
we cannot answer this question without knowing the term to maturity on the bonds
3.63%
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