Question
In: Finance
Consider the following yields to maturity on various one-year zero-coupon bonds; Treasury:4.85%, AAA corporate:5.075%, BBB corporate:5.9%,...
Consider the following yields to maturity on various one-year zero-coupon bonds; Treasury:4.85%, AAA corporate:5.075%, BBB corporate:5.9%, B corporate:6.55%. The credit spread of the B corporate bond is closest to:
a. 0.225%
b. 4.85%
c. 1.05%
d. 1.7%
Solutions
Expert Solution
Yield on Treasury = 4.85%
Yield on B corporate bond = 6.55%
Spread on B corporate bond = 0.0655 - 0.0485
Spread on B corporate bond = 1.70%
jeff jeffy answered 2 years agoRelated Solutions
The following table summarizes the yields to maturity onseveral one-year, zero-coupon securities:SecurityYield (%)...
The following table summarizes the yields to maturity on
several one-year, zero-coupon securities:SecurityYield (%)Treasury3.08AAA corporate3.16BBB corporate4.20B corporate4.85a. 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
The following is a list of prices for zero-coupon bonds of various maturities. Calculate the yields...
The following is a list of prices for zero-coupon bonds of
various maturities. Calculate the yields to maturity of each bond
and the implied sequence of forward rates. Maturity (Years) Price
of Bond
1 $917.43 YTM= IFR=
2 $826.51 YTM= IFR=
3 $737.96 YTM= IFR=
4 $653.06 YTM= IFR=
U.S. Treasury 30 year maturity, zero coupon bonds are currently selling in the marketplace with a...
U.S. Treasury 30 year maturity, zero coupon bonds are currently
selling in the marketplace with a yield to maturity of 7.00%. Even
though the bonds have a coupon rate of 0.00%, please assume
semi–annual compounding, which is the bond market convention? If
inflation increased unexpectedly, forcing the nominal required rate
of return on these Treasury bonds to increase by 1.50% to 8.50%, by
what dollar amount would the current market price of these bonds
decrease? Enter your answer rounded to...
The following table summarizes the yields to maturity on several one-year, zero-coupon securities: Security Yield (%)...
The following table summarizes the yields to maturity on
several one-year, zero-coupon securities:
Security
Yield (%)
Treasury
3.08
AAA corporate
3.20
BBB corporate
4.22
B corporate
4.87
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...
The following table summarizes the yields to maturity on several one-year, zero-coupon securities: Security Yield (%)...
The following table summarizes the yields to maturity on
several one-year, zero-coupon securities:
Security
Yield (%)
Treasury
3.093.09
AAA corporate
3.153.15
BBB corporate
4.204.20
B corporate
4.864.86
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...
The following table summarizes the yields to maturity on several one-year, zero-coupon securities: Security Yield (%)...
The following table summarizes the yields to maturity on
several one-year, zero-coupon securities:
Security
Yield (%)
Treasury
3.12
AAA corporate
3.26
BBB corporate
4.26
B corporate
4.96
a. What is the price (expressed as a percentage of the face
value) of a one-year, zero-coupon corporate bond with a
AAArating?
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?...
The following table summarizes the yields to maturity on several one-year, zero-coupon securities: Security Yield (%)...
The following table summarizes the yields to maturity on
several one-year, zero-coupon securities: Security Yield (%)
Treasury 3.063.06 AAA corporate 3.183.18 BBB corporate 4.184.18 B
corporate 4.844.84 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...
The following table summarizes the yields to maturity on several one-year, zero-coupon securities: Security Yield (%)...
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...
The following table summarizes the yields to maturity on several one-year, zero-coupon securities: Security Yield (%)...
The following table summarizes the yields to maturity on
several one-year, zero-coupon securities:
Security
Yield (%)
Treasury
3.063.06
AAA corporate
3.133.13
BBB corporate
4.124.12
B corporate
4.884.88
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...
The following table summarizes the yields to maturity on several one-year, zero-coupon securities: Security Yield (%)...
The following table summarizes the yields to maturity on
several one-year, zero-coupon securities: Security Yield (%)
Treasury 3.07 AAA corporate 3.19 BBB corporate 4.14 B corporate
4.85 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...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Explain the use of neural networking modeling in predictive analytics.
- Current Market Mix of Netflix, as detail as possible, please.
- This is all one question, thank you so much in advance! You must evaluate a proposal...
- X Company is considering the purchase of a new processor that costs $200,000. Shipping and setup...
- There are a large number of tasks involved in information technology and programming, and many of...
- Using one quantitative and one qualitative health policy research method described in this chapter, design a...
- What is the Rawls' solution to the age-old question of social (economic / distributive) justice?...
ADVERTISEMENT