Question $19(1$ point$)$

Mango Inc. is going to issue a $25-$year bond with a coupon rate of $6\mathrm{.}50\%($with $11$

coupon payments per year$)$ and a face value of $$1,000.$ Mango Inc. believes it can be

rated A by Standard and Poor's. However, because of recent financial difficulties at

the company, Standard and Poor's is warning that it may downgrade Mango Inc.

Industries bonds to BBB$.$ Yields on A$-$rated, long$-$term bonds are currently $3\mathrm{.}10\%$

$($quoted as an annual percentage rate $($APR$)),$ and yields on BBB$-$rated bonds are

$7\mathrm{.}50\%($quoted as APR$).$ What is the $\%$ change in the price of the bond if it is

downgraded?

Instructions: Round the result to two decimal places and do not put the $"\%"$ symbol

in the answer box. For example if you get a result of $-7\mathrm{.}5432\%$ then write $-7\mathrm{.}54$ in

the answer box below.

Your Answer:

Answer