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The following table summarizes the yields to maturity on several one-year, zero-coupon securities B a. What is the price (expressed as a percentage of the
The following table summarizes the yields to maturity on several one-year, zero-coupon securities B 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 % (Round to three decimal places.) b. What is the credit spread on AAA-rated corporate bonds? -X Data table The credit spread on AAA-rated corporate bonds is % (Round to two decimal places.) c. What is the credit spread on B-rated corporate bonds? (Click on the following icon in order to copy its contents into a spreadsheet.) Important The yields displayed are annually compounded yields. 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.) Security Treasury AAA corporate BBB corporate B corporate Yield (%) 3.13 3.20 4.28 4.98 O A. The credit spread decreases as the bond rating falls because lower-rated bonds are riskier. OB. The credit spread decreases as the bond rating rises because higher-rated bonds are riskier. O C. The credit spread increases as the bond rating rises because higher-rated bonds are riskier. OD. The credit spread increases as the bond rating falls because lower-rated bonds are riskier. Print Done
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