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The following table summarizes the yields to maturity on several one - year, zero - coupon securities: . ( Note: The yields displayed in the
The following table summarizes the yields to maturity on several oneyear, zerocoupon securities: Note: The yields displayed in the table are annually compounded yields.
aWhat is the price expressed as a percentage of the face value of a oneyear, zerocoupon corporate bond with an AAA rating?
b What is the credit spread on AAArated corporate bonds?
c What is the credit spread on Brated corporate bonds?
d How does the credit spread change with the bond rating? Why?
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