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Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 83 basis points (0.83%). Your
Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 83 basis points (0.83%). Your firm's five-year has semi-annual coupons and a coupon rate of 4%. You see that new five-year Government of Canada bonds are being issued with a YTM of 2%. What should the price of your outstanding five-year bonds be? Assume a par value of $100.
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