Mike firm has credit rating

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Mike's firm has a credit rating of A. He notices that the credit spread for five -year maturity A debt is 89 basis points (0.89%). His firm's five-year debt has a coupon rate of 8%. He sees that new five-year Government of Canada bonds are being issued with a YTM of 2%. What should the price of his outstanding five -year bonds be? Assume a $100 par value and that the bonds pay semi-annual coupons.

The price of his outstanding five -year bonds should be? $

(Round to the nearest cent.)

Reference no: EM131869855

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