A bond's credit rating provides a guide to its price. As we write this in early 2012,

Question:

A bond's credit rating provides a guide to its price. As we write this in early 2012, Aaa bonds yield 5.3% and Baa bonds yield 5.9%. If some bad news causes a 10% five-year bond to be unexpectedly downrated from Aaa to Baa, what would be the effect on the bond price? (Assume annual coupons.)