Question
A corporate bond with a coupon rate of 7.5 percent has 14 years left to maturity. It has had a credit rating of BBB and
A corporate bond with a coupon rate of 7.5 percent has 14 years left to maturity. It has had a credit rating of BBB and a yield to maturity of 8.2 percent. The firm has recently gotten into some trouble and the rating agency is downgrading the bonds to BB. The new appropriate discount rate will be 9.5 percent. (Assume interest payments are semiannual.) What will be the change in the bonds price in dollars?
What will be the change in the percentage?
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Finance for Non Financial Managers
Authors: Pierre Bergeron
7th edition
176530835, 978-0176530839
