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(Bond valuation) Pybus, Inc. is considering issuing bonds that will mature in 16 years with an...

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Finance

(Bond valuation) Pybus, Inc. is considering issuing bonds thatwill mature in 16 years with an annual coupon rate of 9 percent.Their par value will be $1,000?, and the interest will be paidsemiannually. Pybus is hoping to get a AA rating on its bonds? and,if it? does, the yield to maturity on similar AA bonds is 7percent. ? However, Pybus is not sure whether the new bonds willreceive a AA rating. If they receive an A?rating, the yield tomaturity on similar A bonds is 8 percent. What will be the price ofthese bonds if they receive either an A or a AA? rating?

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3.9 Ratings (431 Votes)
Price of the Pybus Inc bond if it received a AA rating Information provided Par value future value 1000 Time 16 years2 32 semiannual periods Coupon rate 92 450 Coupon payment 00451000 45 Yield to maturity 72 350 The    See Answer
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(Bond valuation) Pybus, Inc. is considering issuing bonds thatwill mature in 16 years with an annual coupon rate of 9 percent.Their par value will be $1,000?, and the interest will be paidsemiannually. Pybus is hoping to get a AA rating on its bonds? and,if it? does, the yield to maturity on similar AA bonds is 7percent. ? However, Pybus is not sure whether the new bonds willreceive a AA rating. If they receive an A?rating, the yield tomaturity on similar A bonds is 8 percent. What will be the price ofthese bonds if they receive either an A or a AA? rating?

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