The following table summarizes the yields to maturity on several$$ one$-$year, zero$-$coupon$$ securities: LOADING.... $($Note$$: The yields displayed in the table are annually compounded$$ yields.$)$

a$.$ What is the price$($expressed as a percentage of the face$$ value$)$ of a$$ one$-$year, zero$-$coupon corporate bond with an 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?

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Part $1$

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

$$

enter your response here$\%.($Round to three decimal$$ places.$)$ Security Yield $(\%)$

Treasury $3\mathrm{.}11$

AAA corporate $3\mathrm{.}25$

BBB corporate $4\mathrm{.}19$

B corporate $4\mathrm{.}89$