Question
The following table summarizes yields to maturity on several 1-year, zero-coupon securities:(Click on the following icon in order to copy its contents into a spreadsheet.)
The following table summarizes yields to maturity on several 1-year, zero-coupon securities:(Click on the following icon in order to copy its contents into a spreadsheet.) Security Yield Treasury % AAA corporate % BBB corporate % B corporate % a. What is the price (expressed as a percentage of the face value) of a 1-year, zero-coupon corporate bond with a AAA-rating and a face value of ? 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? Note: Assume annual compounding. Question content area bottom Part 1 a. What is the price (expressed as a percentage of the face value) of a 1-year, zero-coupon corporate bond with a AAA-rating and a face value of ? The price, expressed as a percentage of the face value, is enter your response here%. (Round to three decimal places.)
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