Price of the treasury bond


Can you assist me get started with this assignment?

Problem: A BBB-rated corporate bond has a yield to maturity of 8.2%. A US Treasury security has a yield to maturity of 6.5%. These yields are quoted as APR's with semiannual compounding. Both bonds pay semiannual coupons at a rate of 7% 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?

Solution Preview :

Prepared by a verified Expert
Finance Basics: Price of the treasury bond
Reference No:- TGS01819532

Now Priced at $25 (50% Discount)

Recommended (90%)

Rated (4.3/5)