A bbb-rated corporate bond has a yield to maturity of 83 a, Financial Management

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A bbb-rated corporate bond has a yield to maturity of 83 a

A BBB-rated corporate bond has a yield to maturity of 8.3%. A U.S. Treasury security has a yield to maturity of 6.4%. These yields are quoted as APRs with semi annual compounding. Both bonds pay semi annual coupons at an annual rate of 7.3% and have five years to maturity.

A. What is the price (expressed as a percentage of the face value) of the Treasury bond?

B. What is the price (expressed as a percentage of the face value) of the BBB-rated corporate bond?

C. What is the credit spread on the BBB bonds?

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Financial Management: A bbb-rated corporate bond has a yield to maturity of 83 a

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Financial Management: A bbb-rated corporate bond has a yield to maturity of 83 a

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