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A bond s credit rating provides a guide to its risk. Long - term bonds rated Aa currently offer yields to maturity of 7 .

A bonds credit rating provides a guide to its risk. Long-term bonds rated Aa currently offer yields to maturity of 7.5%. A-rated bonds sell at yields of 8%. A 10-year bond with a coupon rate of 7% is trading at 96.55, which represents a yield of 7.5%. If it is downgraded by Moodys from Aa to A rating, will its price rise or fall? What will the price be before and after? (question how do you know the face value of the bond

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