Problem $3$

A $$1,000$ face value corporate bond with a $6\mathrm{.}5\%$ coupon $($paid semiannually$)$ has $15$ years left to maturity. It has had a credit rating of BBB and a YTM of $7\mathrm{.}2\%.$ The firm has recently gotten into some trouble and the rating agency is downgrading the bonds to BB$.$ The new appropriate discount rate will be $8\mathrm{.}5\%.$ What will be the change in the bond's price in dollars and percentage terms?