Currently, 5-year annual corporate bonds with an AA rating have an average credit spread of 150 basis points. The yield to maturity of 5-year Treasury annual coupon bonds is currently 0.8%. Estimate the yield to maturity of an AA rated, 5-year annual corporate bond. (Use the credit spread formula to compute the yield to maturity.)

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Answer rating: 100% (QA)

To estimate the yield to maturity YTM of an AArated 5year annual corporat... View the full answer