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1. Suppose that Johnson and Gordon bonds are rated AA and trade at a yield to maturity of 6.77%. The bonds pay an annual coupon

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1. Suppose that Johnson and Gordon bonds are rated AA and trade at a yield to maturity of 6.77%. The bonds pay an annual coupon of 7.50%, with $1,000 face value (or equivalently, par value), and will mature in 16.00 years. After a good financial review, S\&P decides to upgrade the credit rating to AAA. Immediately, the new rating reduces the yield to maturity to 6.02%. What is the new price of Johnson and Gordon bonds? A. $1,149.36 B. $1,249.36 C. $1,349.36 D. $1,449.36 E. $1,549.36

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