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DIA [1.3K]
3 years ago
9

Consider the following yields to maturity on various one-year zero-coupon securities:

Business
1 answer:
Anika [276]3 years ago
5 0

Answer:

A) 1.0%

Explanation:

Given that

Security Yield             (%)

Treasury                      4.6

AAA corporate           4.8

BBB corporate           5.6

B Corporate               6.2

By considering the above information, the credit spread of the BBB corporate bond would be

= BBB corporate - Treasury

= 5.6% - 4.6%

= 1.0%

We simply deduct the treasury from the BBB corporate so that the credit spread could come

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