29. A bonds credit rating provides a guide to its price. As we write this in Spring...

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29. A bond’s credit rating provides a guide to its price. As we write this in Spring 2009, Aaa bonds yield 5.41% and Baa bonds yield 8.47%. If some bad news causes a 10% five-year bond to be unexpectedly downrated from Aaa to Baa, what would be the effect on the bond price? (Assume annual coupons.)

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Principles Of Corporate Finance

ISBN: 9780071314176

10th Global Edition

Authors: Richard Brealey

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