The following table summarises the yields to maturity on several one-year, zero-coupon securities:

Security	Yield (%)
Treasury	3.05
AAA corporate	3.12
BBB corporate	4.14
B corporate	4.90

a. The price of this bond will be

nothing %.

(Round to the nearest cent.)

b. The credit spread on AAA-rated corporate bonds is

nothing %.

(Enter your response as a percent rounded to two decimal places.)

c. The credit spread on B-rated corporate bonds is

nothing %.

(Enter your response as a percent rounded to two decimal places.)

d. How does the credit spread change with the bond rating? Why? (Select the best choice below.)

A.

The credit spread increases as the bond rating falls because lower-rated bonds are riskier.

B.

The credit spread decreases as the bond rating falls because lower-rated bonds are riskier.

C.

The credit spread increases as the bond rating rises because higher-rated bonds are riskier.

D.

The credit spread decreases as the bond rating rises because higher-rated bonds are riskier.