eLab

Question $4,$ P$9-6($similar to$)$

Part $1$ of $2$

HW Score: $58\mathrm{.}61\%,29\mathrm{.}31$ of $50$ points

Points: $0$ of $4$

$($Related to Checkpoint $9\mathrm{.}3)($Bond valuation$)$ Pybus, Inc. is considering issuing bonds that will mature in $15$ years with an annual coupon rate of $6$ percent. Their par value will be $$1,000,$ and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if it does, the yield to maturity on similar AA bonds is $9\mathrm{.}5$ percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A rating, the yield to maturity on similar A bonds is $10\mathrm{.}5$ percent. What will be the price of these bonds if they receive either an A or a AA rating?

a$.$ The price of the Pybus bonds if they receive a AA rating will be $ $($Round to the nearest cent.$)$