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A $1 000 face value corporate bond with a 6 5 percent coupon paid semiannually has 15 years left to maturity It has had a credit rating of BBB and a yield to maturity of 7 2 percent The firm has

A $1,000 face value corporate bond with a 6.5 percent coupon (paid semiannually) has 15 years left to maturity. It has had a credit rating of BBB and a yield to maturity of 7.2 percent. The firm has recently gotten into some trouble and the rating agency is downgrading the bonds to BB. The new appropriate discount rate will be 8.5 percent. What will be the change in the bond’s price in dollars and percentage terms?

May 18 2020 View more View Less

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