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First determine the difference between the AAA and CCC spreads. This indicates how much more of a yield is required on CCC-rated bonds versus AAA- rated bonds. Next, determine the difference between AAA and BBB spreads. Then determine the difference between BBB and CCC spreads.

a. Is the difference larger between AAA and BBB or the BBB and CCC spreads?

b. What does this tell you about the perceived risk of the bonds in these rating categories?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92296287

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