Failing Corporation has issued a bond (face value of $1,000) with a coupon rate of 6.8% and having 14 years left to maturity. Failing Corporation has had a credit rating of BBB and a yield to maturity of 7.5%. However, Failing Corporation has been running into financial trouble and the rating agency has downgraded its bond rating to BB. The new appropriate discount rate will be 8.8%.

a) Suggest the change in Failing Corporation's bond price in dollars.

b) Determine the change in %.

Answer rating: 100% (QA)

To calculate the change in Failing Corporations bond price we need to compare the bond prices before ... View the full answer