Question
Calculate the change in the value of the Amazon bond if they purchase Whole Foods You own an Amazon bond that has a 4.50% annual
Calculate the change in the value of the Amazon bond if they purchase Whole Foods
You own an Amazon bond that has a 4.50% annual coupon rate, has 10 years to maturity, and has a face value of $1,000. This bond's yield to maturity is 4% and its credit rating is A.
Amazon is thinking of purchasing Whole Foods. Amazon would pay for Whole Foods $100 billion by issuing new debt. Their bond rating will change to BBB and bond will widen by 100 basis points.
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Personal Finance
Authors: Jeff Madura
5th edition
132994348, 978-0132994347
