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The 10-year Treasury bond currently has a YTM of 5.0%. A double-A rated corporate bond is trading at 200 basis points over Treasuries and an

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The 10-year Treasury bond currently has a YTM of 5.0%. A double-A rated corporate bond is trading at 200 basis points over Treasuries and an A-rated corporate bond is trading at 100 basis points over Treasuries. Both corporates have 10-year maturities and are non-callable with similar coupons. What do you do? Buy the AA-rated bond, short the A-rated bond Buy the A-rated bond, short the AA-rated bond Buy the Treasury, short both corporate bonds Buy the AA-rated bond because it is the safest

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