Richter Corporation is a retailer in the technology industry with a 10-year bond issue outstanding. At the

Question:

Richter is a retailer in the technology industry with a 10-year bond issue outstanding. At the time of issuance on January 1, 2014, the bonds were assigned a BBB- credit rating by Standard & Poor's, and the market rate for the bonds was 9%. Due to new competition in the industry, Richter experienced four consecutive quarters of increasing losses and deteriorating financial position in 2014.
(a) Discuss the potential impact on the bonds' credit rating, if any.
(b) Discuss the potential impact on investors' required yield on the bonds, if any.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...