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Please fill in the blanks. The bond maturing in 10-year was downgraded from Aa - A. Its yield to maturity increases from 7.5% to 7.8%
Please fill in the blanks. The bond maturing in 10-year was downgraded from Aa - A. Its yield to maturity increases from 7.5% to 7.8% because when the perceived default risk increases. The bond price will fall: Initialprice=PV=$70[1(1..)1]+1.07510$1,000=$965.68 New price =PV=$70[0.07810.078(1.078)1]+1.078$
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