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???(Bond valuation)?Pybus, Inc. is considering issuing bonds that will mature in 23 years with an annual...

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???(Bond valuation)?Pybus, Inc. is considering issuing bondsthat will mature in 23 years with an annual coupon rate of 8percent. Their par value will be ?$1,000?, and the interest will bepaid 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 10percent. ? 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 11 percent. What will be the priceof these bonds if they receive either an A or a AA? rating?

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4.3 Ratings (582 Votes)
The price of these bonds if they receive A rating The Issue Price of the Bond is the Present Value of the Coupon Payments plus the Present Value of the face Value Face Value of the bond 1000 Semiannual Coupon Amount 40 1000 x 8 x Semiannual Yield to Maturity 550 11    See Answer
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???(Bond valuation)?Pybus, Inc. is considering issuing bondsthat will mature in 23 years with an annual coupon rate of 8percent. Their par value will be ?$1,000?, and the interest will bepaid 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 10percent. ? 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 11 percent. What will be the priceof these bonds if they receive either an A or a AA? rating?

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