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What happens if there is a downgrade in bond rating? Suppose the major bond rating agencies unexpectedly downgrade the organization's credit rating from A to

What happens if there is a downgrade in bond rating? Suppose the major bond rating agencies unexpectedly downgrade the organization's credit rating from A to triple-B before the firm could initiate the refunding, resulting in a 7.5 percent coupon rate and flotation costs of 1.5 percent on the new issue. 


How would these changes affect the refunding decision?

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