Suppose a large firm seeks to raise capital by issuing a bond at
the beginning of 2017 with a $5,000 face value and $250 coupon
payments to be made at the end of 2017, 2018, 2019, and 2020. The
corporation will also repay the principle amount of the bond back
to investors at the end of 2020\.
1. What is the rate of interest that the firm is paying on its
bonds?
2. If Moody’s decides to upgrade the firm’s...