A-rated bonds sell at yields of 63 assume a 10-year bond


A bond's credit rating provides a guide to its risk. Long-term bonds rated Aa currently offer yields to maturity of 6%. A-rated bonds sell at yields of 6.3%. Assume a 10-year bond with a coupon rate of 5.5% is downgraded by Moody's from Aa to A rating. Calculate the initial price. Calculate the new price.

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Finance Basics: A-rated bonds sell at yields of 63 assume a 10-year bond
Reference No:- TGS01005558

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