Reference no: EM133056820
Pybus, Inc. is considering issuing bonds that will mature in 22 years with an annual coupon rate of 9 percent. Their par value will be $1,000?, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds? and, if it? does, the yield to maturity on similar AA bonds is 10.5 percent. ? However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A? rating, the yield to maturity on similar A bonds is 11.5 percent. What will be the price of these bonds if they receive either an A or a AA? rating?
The price of the Pybus bonds if they receive a AA rating will be ?$_______enter your response here. (Round to the nearest? cent.)
2.Fingen's 13?-year, $1,000 par value bonds pay 8 percent interest annually. The market price of the bonds is ?$880 and the? market's required yield to maturity on a? comparable-risk bond is 11 percent.
a. Compute the? bond's yield to maturity.
b. Determine the value of the bond to? you, given your required rate of return.
c. Should you purchase the? bond?
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