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Pybus, Inc., is considering issuing bonds that will mature in 20 years with an 8 percent annual coupon rate. Their par value will be $1000, 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 7.5 percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive a A rating, the yield to maturity on similar A bonds is 8.5 percent. What will be the price of these bonds if they receive either a A or AA rating?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91419044

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