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Pybus, Inc. is considering issuing bonds that will mature in 20 years with an annual coupon rate of 9 percent. Their par value will be
Pybus, Inc. is considering issuing bonds that will mature in 20 years with an annual coupon rate of 9 percent. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get an AA rating on its bond and, if it does, the yield to maturity on similar AA bonds is 12 percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A rating, the yield to maturity on a similar A bond is 13 percent. What will be the price of these bonds if they receive either an A or AA rating?
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