Question
Consider the following yields for corporate coupon bonds with a maturity between 7 and 10 years. These rates have remained constant since last year. Assume
Consider the following yields for corporate coupon bonds with a maturity between 7 and 10 years. These rates have remained constant since last year. Assume annual coupon payments and annual compounding throughout this problem.
Rating | AAA | AA | A | BBB | BB |
YTM | 2.0% | 3.37% | 4.19% | 4.8% | 5.31% |
Exactly one year ago, an investor bought a freshly issued 8.08.0%, 99-year, $$10001000-face value coupon bond from Wildcard AG at a time when Wildcard was rated BBB.
What did the investor pay for this bond? $$. (Round to the nearest cent.)
Today, Wildcard was upgraded to A. What is this bond worth today? $$(Round to the nearest cent.)
What is the percentage investment return that the investor achieves if he sells this bond today, right after the annual coupon has been paid? % (2 post-comma digits)
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