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The following table summarizes the yields to maturity on several one-year zero-coupon securities a. What is the price (expressed as a percentage of the face

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The following table summarizes the yields to maturity on several one-year zero-coupon securities a. What is the price (expressed as a percentage of the face value) of a one-year, zero-coupon corporate bond with a AAA rating b. What is the credit spread on AAA-rated corporate bonds? c. What is the credit spread on B-rated corporate bonds? d. How does the credit spread change with the bond rating? Why? a. What is the price (expressed as a percentage of the face value) of a one-year zero-coupon corporate bond with a AAA rating? The price of this bond will be 7% (Round to three decimal places) b. What is the credit spread on AAA-rated corporate bonds? The credit spread on AAA-rated corporate bonds is 11% (Round to two decimal places) c. What is the credit spread on B-rated corporate bonds? The credit spread on B-rated corporate bonds is % (Round to two decimal places) d. How does the credit spread change with the bond rating? Why? (Select the best choice below) O A. The credit spread increases as the bond rating rises because higher-rated bonds are niskier OB. The credit spread increases as the bond rating falls because lower-rated bonds are riskier, OC. The credit spread decreases as the bond rating falls because lower-rated bonds are riskier OD. The credit spread decreases as the bond rating rises because higher-rated bonds are riskier Data Table - (Click on the following icon in order to copy its contents into a spreadsheet) Important The yields displayed are annually compounded yields Security Yield (%) Treasury 3.06 AAA corporate 3.13 BBB corporate 4.19 B corporate 4.82

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