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Assume you pay $1,343 for a Tesla bond (14-year maturity, 6.5% coupon bond, paid semi-annually, with a YTM of 3.4%, $1,000 principal). If Tesla is

Assume you pay $1,343 for a Tesla bond (14-year maturity, 6.5% coupon bond, paid semi-annually, with a YTM of 3.4%, $1,000 principal). If Tesla is downgraded and the default risk premium of Tesla increases by 5.0%, all-else-equal, what is the new bond price of Telsa?

$1,200

$950

$845

$935

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