A 2000 face value corporate bond with a 530 percent coupon, Ask an Expert

Finance

A $2,000 face value corporate bond with a 5.30 percent coupon (paid semiannually) has 12 years left to maturity. It has had a credit rating of BB and a yield to maturity of 7.4 percent. The firm recently became more financially stable and the rating agency is upgrading the bonds to BBB. The new appropriate discount rate will be 6.5 percent.

What will be the change in the bond’s price in dollars and percentage terms? (Round your answers to 3 decimal places. (e.g., 32.161))

Change in the bond’s price in dollars $________

Change in the bond’s price in percentage %_______

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Financial Management, Finance

Category:- Financial Management
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