Corporate bonds of various credit ratings

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Reference no: EM13870674

Luther Industries needs to raise $25 million to fund a new office complex. The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 7.0% (annual payments). The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:

Assuming that Luther's bonds receive a AAA rating, the price of the bonds will be closest to:

1) $1021

2) $1014

3) $1000

4) $937

Reference no: EM13870674

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