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ABC Pharmaceuticals Inc. issued $100 million in bonds due in 10 years. After discussions with its investment banker, ABC decided that the bonds would be
ABC Pharmaceuticals Inc. issued $100 million in bonds due in 10 years. After discussions with its investment banker, ABC decided that the bonds would be issued with a coupon rate of 7 percent with interest paid annually. The 7% coupon bonds were issued at par. Suppose one year after issuance, the company issues a press release stating it is under investigation by the SEC for fraud. After issuing the press release the bond's coupon rate and yield to maturity would Increase and decrease, respectively Decrease and remain constant, respectively Remain constant and decrease, respectively Remain constant and increase, respectively
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