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Credit Spread in Basis Points Time to Maturity Rating 1 3 5 10 20 AAA 30 65 90 100 140 AA 50 95 110 135
Credit Spread in Basis Points | |||||
Time to Maturity | |||||
Rating | 1 | 3 | 5 | 10 | 20 |
AAA | 30 | 65 | 90 | 100 | 140 |
AA | 50 | 95 | 110 | 135 | 170 |
A | 90 | 125 | 175 | 200 | 250 |
BBB | 120 | 150 | 220 | 250 | 300 |
BB | 225 | 300 | 350 | 450 | 520 |
B | 320 | 420 | 500 | 620 | 680 |
CCC | 500 | 700 | 850 | 1050 | 1300 |
Central Perk Co. just issued 20-yr coupon bonds rated at BB. The bonds sold at their $100 par value. 20-yr treasury notes have a YTM of 3.6%.
After 10 years Central Perks bonds have been upgraded to A. Assuming credit spreads remain unchanged and that 10-yr treasury notes have a YTM of 3.5%, what is the new price of Central Perks bonds?
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