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Calculate the initial price

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Problem: A bond's credit rating provides a guide to its risk. Long-term bonds rated Aa currently offer yields to maturity of 6.9%. A-rated bonds sell at yields of 7.2%. Assume a 10-year bond with a coupon rate of 6.4% is downgraded by Moody's from Aa to A rating.

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Question 1: Calculate the initial price

Question 2: Calculate the new price

Reference no: EM132443163

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