You are asked to value a issue of corporate bonds issued by Macy$$s $($ticker M$,$ S&P credit rating $$BB$+)$ with the following characteristics:

Face value $=$ $$1,000$; Annual coupon$=$$$80($paid in semi$-$annual installments$)$; Maturity $=10$ years; Today$$s price $=$ $$965\mathrm{.}50$

a$.$ What is the Yield to Maturity for those bonds?

Assume that the above bonds will provide fair compensation for the risk of investment if they offer the YTM you computed in part $($A$).$ Compare YTM from Part A to YTM equal to that of a typical BB$+$ rated issuer $(=1\mathrm{.}74\%).$ Based on that comparison:

a$.$ Is Macy's riskier or less risky compared to to the typical BB$+$ issuer?

b$.$ Should Macy's be upgraded or downgraded by S&P$?$

Assume, instead, that Macy$$s bonds in part $($A$)$ should be associated with the YTM equal to that of a typical $($average$)$ BB$+$ rated issuer. Assume that the market participants will realize this very shortly $($say$,$ tomorrow$).$

a$.$What will be the new price of the bonds described in part $($A$)$ once the bonds trade at a price associated with the new YTM$?$

b$.$ Should you buy or sell Macy's bonds today?

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