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What will be the price of these bonds

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Problem - Pybus, Inc. is considering issuing bonds that will mature in 18 years with an annual coupon rate of 8 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?

Reference no: EM132982711

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