The price of the bond should be

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Reference no: EM131580863

1. A company issued an 8-year corporate bond with a face value of $1000. The coupon rate is 7% and the yield to maturity is 6%. The price of the bond should be:

2. A bond’s credit rating provides a guide to its risk. Suppose long-term bonds rated Aa offer yields to maturity of 9.7%. A-rated bonds sell at yields of 10.1%. Assume a 10-year bond with a coupon rate of 9.3% and face value of $1,000 is downgraded by Moody’s from Aa to A rating. Calculate the new price.

Reference no: EM131580863

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