Question
(Bond valuation) Pybus, Inc. is considering issuing bonds that will mature in 22 years with an annual coupon rate of 6 percent. Their par value
(Bond valuation)Pybus, Inc. is considering issuing bonds that will mature in 22
years with an annual coupon rate of 6percent. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bondsand, if itdoes, the yield to maturity on similar AA bonds is 9.5 percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an Arating, the yield to maturity on similar A bonds is 10.5percent. What will be the price of these bonds if they receive either an A or a AArating?
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The Changing Geography Of Banking And Finance
Authors: Pietro Alessandrini ,Michele Fratianni ,Alberto Zazzaro
1st Edition
1441947205, 978-1441947208
