What is your rate of return on a 1-year investment in abc, Financial Management

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What is your rate of return on a 1-year investment in abc

ABC Bonds are currently rated AA. The bonds mature in 10 years and have a coupon rate of 6.5%. You are convinced that the bonds will be downgraded to BBB 1 year from now. If AA bonds have a YTM of 7% and BBB bonds have a YTM of 8.6%, what is your rate of return on a 1-year investment in ABC Bonds if they are downgraded at the end of the year? Answer to 4 decimal places, for example 0.1234.

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