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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:

Security

Yield (%)

Treasury

3.08

AAA corporate

3.16

BBB corporate

4.20

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 rating? Why

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jeff jeffy answered 2 years ago
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