Question
In: Finance
Andrew Industries is contemplating issuing a 30-year bond with a coupon rate of 5.79 %(annual coupon...
Andrew Industries is contemplating issuing a 30-year bond with a coupon rate of 5.79 %(annual coupon payments) and a face value of $1,000. Andrew believes it can get a rating of A from Standard and Poor's. However, due to recent financial difficulties at the company, Standard and Poor's is warning that it may downgrade Andrew Industries bonds to BBB. Yields on A-rated long-term bonds are currently 5.29 % and yields on BBB-rated bonds are 5.69 %
a. What is the price of the bond if Andrew maintains the A rating for the bond issue?
b. What will the price of the bond be if it is downgraded?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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1. Calculate the price of a 30-year annual coupon-ed bond with a coupon rate of 5%,...
1.
Calculate the price of a 30-year annual coupon-ed bond with a
coupon rate of 5%, a market rate of 7%, and a face value of
$1000.
n
i
PV
PMT
FV
fill in data …
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put answer here
2019 Spring2
2.
Calculate the price of a 30-year semiannual coupon-ed bond with a
coupon rate of 5%, a market rate of 7%, and a face value of
$1000....
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(a)
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