A corporate bond with a 6 5 percent coupon 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...

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A corporate bond with a 6.5 percent coupon has 15 years left to maturity. It has had

Question:

A corporate bond with a 6.5 percent has 15 years left to It has had a credit rating of BBB and a yield to 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 will be 8.5 percent. What will be the change in the bond's price in dollars and percentage terms? (Assume interest payments are paid semi-annually.)
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...