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Abiomed has just announced that their debt has been downgraded and is now rated CCC. This news has made the price of Abiomed's bonds
Abiomed has just announced that their debt has been downgraded and is now rated CCC. This news has made the price of Abiomed's bonds drop to $700. Historically, CCC rated debt defaults 12.2% of the time. If Abiomed defaults on their debt, bond holders can expect to lose $0.30 for each dollar invested. Given no other changes regarding Abiomed's debt from the previous question, what is the cost of Abiomed's debt now? 10 points
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Answer The cost of Abiomeds debt can be calculated as follows Probability of default 122 ...
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Management and Cost Accounting
Authors: Colin Drury
8th edition
978-1408041802, 1408041804, 978-1408048566, 1408048566, 978-1408093887
