A BBB$-$rated corporate bond has a yield to maturity of $8\mathrm{.}9\%.$ A U$.$S$.$ Treasury security has a yield to maturity of $7\mathrm{.}4\%.$ These yields are quoted as APRs with semiannual compounding. Both bonds pay semi$-$annual coupons at a rate of $7\mathrm{.}9\%$ and have $5$ years to maturity.

The price of the Treasury bond as a percentage of face value is $\%.($Round to three decimal places.$)$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?

c$.$ What is the credit spread on the BBB bonds?That's incorrect.

To determine the coupon rate that must be set, use the following formula and solve for $y,$ the yield:

$P=\frac{CPN}{y}[1-\frac{1}{(1y{)}^N}]\frac{FV}{(1y{)}^N}$

where $P$ is the price, $CPN$ is the coupon payment, $FV$ is the face value, and $N$ is the number of periods.