Define what will be the price of the bond

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Reference no: EM13280411

Pybus, Inc. is considering issuing bonds that will mature in 25 years with an annual coupon rate of 8% 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 9.5%. However, Pybus is not sure whether the new bonds will recieve a AA rating. If they receive an A rating, the yield to maturity on similar A bonds is 10.5%. What will be the price of the bond if it receives and AA rating? An A rating? (Show would as well as answers)

Reference no: EM13280411

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