Question
A company has 10 year bond outstanding with a BBB rating and the bond is currently selling at par. The bond has a coupon rate
A company has 10 year bond outstanding with a BBB rating and the bond is currently selling at par. The bond has a coupon rate of 8% with interest paid semiannually and $1000 par value. You suddenly learn that the bond rating has changed and that the new bond price is $1350. What can you conclude?
Select one:
a. That the bond rating was raised and that the new yield to maturity is 3.77%.
b. That the bond rating was lowered and that the new yield to maturity is 3.77%.
c. That the bond rating was lowered and that the new yield to maturity is 3.74%.
d. That the bond rating was raised and that the new yield to maturity is 3.74%.
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