HMK Enterprises would like to raise $14 million to invest in capital expenditures. The company plans to issue five-year bonds with a face value of $1,000 and a coupon rate of 4% (annual payments).

The following table summarizes the yield to maturity for five-year (annual-pay) coupon corporate bonds of various ratings:

Rating	AAA	AA	A	BBB	BB
YTM	3.7%	3.9%	4%	4.7%	5.1%

Required

1. What must the rating of the bonds be for them to sell at par?
2. Assuming the bonds will be rated AA, what will the price of the bonds be? How much total principal amount of these bonds must HMK issue to raise $14 million today, assuming the bonds are AA rated?
3. Suppose that when the bonds are issued, the price of each bond is $952.51. What is the likely rating of the bonds? Are they junk bonds?