A BBB-rated corporate bond has a yield to maturity of 10.3%. A U.S.
A BBB-rated corporate bond has a yield to maturity of 10.3%. A U.S.
Treasury security has a yield to maturity of 8.7 % 。 These yields are quoted as APRs with semi-annual compounding. Both bonds pay semi-annual coupons at an annual rate of 9.2 % 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?
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