Assuming forward rates remain the same in future years If GH is A-rated in 1 year, what is its value in 1 year? Answer: $305.14 If GH is AA-rated in 2 years, what is its value in 2 years? Answer: $308.49 Consider GH Bond Face Value: $300 Coupon Rate: 3.2% Years to Maturity: 3 Current Rating: A A 2 3 Maturity AAA AA 1 2.91% 3.58% 3.63% 2.93% 3.96% 3.99% 3.30% 4.48% 4.59% 3.86% 4.95% 5.07% 4.17% 5.17% 5.29% 4.42% 5.30% 5.43% 4.68% 5.44% 5.56% 4.93% 5.53% 5.65% 4 5 6 8 Discount Rate 0 1 2 3 4 5 6 7 8 A AAA AA 1.0000 1.0000 1.0000 0.9717 0.9654 0.9649 0.9440 0.9253 0.9247 0.9072 0.8767 0.8741 0.8595 0.8242 0.8204 0.8153 0.7773 0.7727 0.7713 0.7334 0.7283 0.7262 0.6903 0.6848 0.6804 0.6501 0.6440