A $1,000 face value corporate bond with a 6.75 percent cou- pon (paid semiannually) has 10 years

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A $1,000 face value corporate bond with a 6.75 percent cou- pon (paid semiannually) has 10 years left to maturity. It has had a credit rating of BB and a yield to maturity of 8.2 percent. The firm recently became more financially stable and the rat- ing agency is upgrading the bonds to BBB. The new appropri- ate discount rate will be 7.1 percent. What will be the change in the bond's price in dollars and percentage terms? (LG 6-2)

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Financial Markets And Institutions

ISBN: 9780078034664

5th Edition

Authors: Anthony Saunders, Marcia Cornett

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