A $ 1,000 face value corporate bond with a 6.75 percent coupon (paid semiannually) has 10 years left to maturity. It has had a credit rating of BB and a yield to maturity of 8.2 percent. The firm recently became more financially stable and the rating agency is upgrading the bonds to BBB. The new appropriate discount rate will be 7.1 percent. What will be the change in the bond’s price in dollars and percentage terms?
Answer to relevant QuestionsHilton Hotels Corp. has a convertible bond issue outstanding. Each bond, with a face value of $ 1,000, can be converted into common shares at a rate of 61.2983 shares of stock per $ 1,000 face value bond (the conversion ...Explain the difference between a federally insured mortgage and a conventional mortgage.How did the U.S. secondary mortgage markets evolve?What is a mortgage-backed bond? Why do financial institutions issue MBBs?You plan to purchase a house for $ 115,000 using a 30-year mortgage obtained from your local bank. You will make a down payment of 20 percent of the purchase price. You will not pay off the mortgage early. a. Your bank ...
Post your question