Question
A $1,000 face value corporate bond with a 6.5% coupon (paid semiannually) has 15 years left to maturity. It has had a credit rating of
A $1,000 face value corporate bond with a 6.5% 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%. The firm has recently got into some trouble and the rating agency is downgrading the bonds to BB. The new appropriate discount rate will be 8.5%. What will be the change in the bonds price in dollars and percentage terms?
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Handbook Of Research On Decision Making Techniques In Financial Marketing
Authors: Hasan Dinçer, Serhat Yüksel
1st Edition
1799825590, 978-1799825593
