Calculate the initial price and new price

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Reference no: EM131185266

A bond’s credit rating provides a guide to its risk. Long-term bonds rated Aa currently offer yields to maturity of 5.1%. A-rated bonds sell at yields of 5.4%. Assume a 10-year bond with a coupon rate of 4.6% is downgraded by Moody’s from Aa to A rating.

a. Calculate the initial price. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Initial price $

b. Calculate the new price. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

New price $

Reference no: EM131185266

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