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andrew industries is contemplating issuing a 3 0 - year bond with a coupon rate of 4 . 3 6 % ( annual coupon payments

andrew industries is contemplating issuing a 30-year bond with a coupon rate of 4.36%(annual coupon payments) and a face value of $1,000. andrew believes it can get a ratin a from standard and poor's. however, due to recent financial difficulties at the company, standard and poor's is warning that it may downgrade andrew industries bonds to bbb yields on a-rated, long-term bonds are currently 3.86%, and yields on bbb-rated bonds are 4.26%. a. what is the price of the bond if andrew maintains the a rating for the bond issue? b. what will the price of the bond be if it is downgraded?

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