A corporate bond with a 65 percent coupon has 15 years left, Ask an Expert

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A corporate bond with a 6.5 percent coupon has 15 years left to maturity. It has had a credit rating of BBB and a yield to maturity of 7.2 percent. The firm has recently gotten into some trouble and the rating agency is downgrading the bonds to BB. The new appropriate discount rate will be 8.5 percent. What will be the change in the bond’s price in dollars and percentage terms? (Assume interest payments are semiannual.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92846508

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