Question: Mango Inc. is going to issue a 2 5 - year bond with a coupon rate of 3 . 0 0 % ( with 3

Mango Inc. is going to issue a 25-year bond with a coupon rate of 3.00%(with 3
coupon payments per year) and a face value of $1,000. Mango Inc. believes it can be
rated A by Standard and Poor's. However, because of recent financial difficulties at
the company, Standard and Poor's is warning that it may downgrade Mango Inc.
Industries bonds to BBB. Yields on A-rated, long-term bonds are currently 5.00%
(quoted as an annual percentage rate (APR)), and yields on BBB-rated bonds are
9.30%(quoted as APR). What is the % change in the price of the bond if it is
downgraded?

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