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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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    • 12 years ago
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