A bonds credit rating provides a guide to its risk, Ask an Expert

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A bond's credit rating provides a guide to its risk. Long-term bonds rated Aa currently offer yields to maturity (YTM) of 4.3%. A-rated bonds sell at yields (YTM) of 3.6%. Assume a 10-year bond with a coupon rate of 5% is downgraded by Moodys from Aa to A rating.

a) Calculate the new price.

b) What's the new current yield?

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Category:- Basic Finance
Reference No.:- M9863734

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