Question
The yield to maturity for 20-year bonds is as follows for four different bond rating categories. AAA 8.80% A 10.00% AA 9.00 BBB 10.20 The
The yield to maturity for 20-year bonds is as follows for four different bond rating categories.
| AAA | 8.80% | A | 10.00% |
| AA | 9.00 | BBB | 10.20 |
The bonds of Falter Corporation were rated as AAA and issued at par a few weeks ago. The bonds have just been downgraded to AA.
Required:
Determine the new price of the bonds, assuming a 20-year maturity and semiannual interest payments. Assume the par value of the bonds is $1,000. (Round the final answer to 2 decimal places.)
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Options Futures And Other Derivatives
Authors: John C. Hull
11th Edition
013693997X, 9780136939979
