A bonds credit rating provides a guide to its risk. Long-term bonds rated Aa currently offer yields to maturity of 8.8%. A-rated bonds sell at yields of 9.1%. Suppose that a 10-year bond with a face value of $1,000 and a coupon rate of 8.3% is downgraded by Moodys from an Aa to A rating. Assume annual compounding.

a.	What is the likely bond price before the downgrade? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Initial price

$

b.	What is the likely bond price after the downgrade? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

New price

$