The following table summarizes the yields to maturity on several one-year, zero-coupon securities: Security Yield (%) Treasury 3.08 AAA corporate 3.15 BBB corporate 4.17 B corporate 4.91
a. What is the price (expressed as a percentage of the face value) of a one-year, zero-coupon corporate bond with a AAA rating? 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?