What will be the price of bond if it is? downgraded

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Reference no: EM131967562

Andrew Industries is contemplating issuing a 30?-year bond with a coupon rate of %7.00% ?(annual coupon? payments) and a face value of $1,000. Andrew believes it can get a rating of A from Standard? & Poor's.? However, due to recent financial difficulties at the? company, Standard? & Poor's is warning that it may downgrade Andrew? Industries' bonds to BBB. Yields on? A-rated, long-term bonds are currently 6.50%?,and yields on? BBB-rated bonds are 6.90%.

a. What is the price of the bond if Andrew Industries maintains the A rating for the bond? issue?

If Andrew maintains the A rating for the bond? issue, the price of the bond is ?$.........?(Round to the nearest? cent.)

b. What will be the price of the bond if it is? downgraded?

If it is? downgraded, the new? bond's price will be ?$.......?(Round to the nearest? cent.)

Reference no: EM131967562

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