1. Calculate the current spread of Aaa- and Baa-rated corporate bonds over the 10-year T-bond rate.How have these spreads changed over the last two years?
2. Explain the difference between a Cost Plus Incentive Fee (CPIF) contract and a Cost Plus Award Fee (CPAF) contract.
3. 30-year corporate bond, paying 4.5%coupon annually. Calculate the bond prices when required rate of return is 4.5%,3%,and 5%.