A $1,000 face value corporate bond with a 6.5 percent coupon (paid semiannually) has 15 years left

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A $1,000 face value corporate bond with a 6.5 percent coupon (paid semiannually) 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.

What will be the change in the bond’s price in dollars and percentage terms? (LG 6-2)

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ISE Financial Markets And Institutions

ISBN: 9781265561437

8th International Edition

Authors: Anthony Saunders, Marcia Cornett, Otgo Erhemjamts

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Question Posted: Jul 25, 2024 06:07 AM

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A $1,000 face value corporate bond with a 6.5 percent coupon (paid semiannually) has 15 years left

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ISE Financial Markets And Institutions

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