Use the Information for the Question(s)below

question 35

Multiple Choice

Use the information for the question(s) below.
-The above table shows the yields to maturity on a number of one-year, zero-coupon securities. What is the credit spread on a one-year, zero-coupon corporate bond with a B rating?

• A)6.9%
• B)0.7%
• C)1.7%
• D)1.8%

---

Definitions:

Notes Receivable

A customer’s written promise to pay an amount and possibly interest at an agreed-upon rate.

Allowance Method

The method of accounting for uncollectible accounts that provides an expense for uncollectible receivables in advance of their write-off.

Receivables

All money claims against other entities, including people, business firms, and other organizations.

Written Off

The process of recognizing that a portion of a company's assets or receivables has decreased in value and is unlikely to be recovered, thus removing it from the balance sheet.