Question
please compute using a TI-84 plus calculator Given the following yields for bonds with different credit ratings: Credit Rating Yield AAA 3% AA 3.2% A
please compute using a TI-84 plus calculator
Given the following yields for bonds with different credit ratings:
- Credit Rating Yield
- AAA 3%
- AA 3.2%
- A 3.5%
- BBB 3.8%
- BB 4.5%
- B 5.25%
a. What would be the fair price of a 5-year maturity bond, which currently has identical risk to a bond rated A, if it has a coupon rate of 12% paid annually, and a par value of $1,000?
b. What would be the price of the same bond 3 years from today if the bond is expected to be downgraded to BBB at the end of the 3rd year?
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1st Edition
1398609048, 978-1398609044
