Cost plus incentive fee-cost plus award fee contract

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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%. 

Reference no: EM131347703

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