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Q.4 A bond's credit rating provides a guide to the its risk. Long-term bonds rated Aa currently offer yields to maturity of 7.5%. A-rated bonds
Q.4 A bond's credit rating provides a guide to the its risk. Long-term bonds rated Aa currently offer yields to maturity of 7.5%. A-rated bonds sell at yield of 7.8%%. If a 10-year bond with a coupon rate of 7% is downgraded by Moody's from Aa to A rating, what is the likely effect on the bond price?
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