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A corporate bond with a 67 percent coupon has 13 years left to maturity It has had a credit rating of BBB and a yield to maturity of 74 percent The firm has recently gotten into some trouble and

A corporate bond with a 6.7 percent coupon has 13 years left to maturity. It has had a credit rating of BBB and a yield to maturity of 7.4 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 8.7 percent. What will be the change in the bond’s price in dollars? (Assume interest payments are semiannual.) (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.) Change in bond price $ What will be the change in the percentage? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.) Change in bond percent %

 

Apr 10 2020 Read more Less More

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