Question
Use the following information to answer the question(s) below. security term(yrs) yield(%) Treasury 20 5.5% AAA Corporate 20 7% BBB Corporate 20 8% B Corporate
Use the following information to answer the question(s) below.
| security | term(yrs) | yield(%) |
| Treasury | 20 | 5.5% |
| AAA Corporate | 20 | 7% |
| BBB Corporate | 20 | 8% |
| B Corporate | 20 | 9.6% |
a) What is the credit spread on AAA-rated corporate bonds?
b) Wyatt Oil is contemplating issuing a 20-year bond with semiannual coupons, a coupon rate of 7%, and a face value of $1000. Wyatt Oil believes it can get a BBB rating from Standard and Poor's for this bond issue. If Wyatt Oil is successful in getting a BBB rating, what is the issue price for these bonds?
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Investments
Authors: Zvi Bodie, Alex Kane, Alan Marcus, Lorne Switzer, Maureen Stapleton, Dana Boyko, Christine Panasian
9th Canadian Edition
1259271935, 9781259271939
