Question
The following table summarizes yields to maturity on several 1-year, zero-coupon securities: Security Yield Treasury 2.800% AAA Corporate 3.068% BBB Corporate 3.713% B Corporate 4.338%
The following table summarizes yields to maturity on several 1-year, zero-coupon securities:
| Security | Yield |
| Treasury | 2.800% |
| AAA Corporate | 3.068% |
| BBB Corporate | 3.713% |
| B Corporate | 4.338% |
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
$1,000?
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.
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Bitcoin Cash What You Need To Know About Bch
Authors: Alexander O. M.
1st Edition
1976721229, 978-1976721229
