a. The price of the Pybus bonds if they receive a AA rating will be $ b. The price of the Pybus bonds if they receive an A rating will be $ (Round to the nearest cont.) (Round to the nearest cent.)
a. The price of the Pybus bonds if they receive a AA rating will be $ b. The price of the Pybus bonds if they receive an A rating will be $ (Round to the nearest cont.) (Round to the nearest cent.)
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 4P
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Transcribed Image Text:2942
(20) Pybus, incis considering issung
bonds that will mature in 154rs
with an annual coupon rate of 12 percent!
Their par value will be $1000 and
the intarest will be semiannuelly.
D
C = 0.12·1000=120/2=
N=15:2=30
N
Ily
1fv 1850
URE
60
R= 8512=2.253
60´[1-1/(1+0.04257207
10,0725 +1000/ (1+0.0425) 20
60 071310822+286-9342
42.7864932+
- 329.120
329.72
Transcribed Image Text:K
(Related to Checkpoint 9.3) (Bond valuation) Pybus, Inc. is considering issuing bonds that will mature in 15 years with an annual coupon rate of 12 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 8.5 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 9.5 percent. What will be the price of these bonds if they receive either an A or a AA rating?
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a. The price of the Pybus bonds if they receive a AA rating will be $. (Round to the nearest cent.)
b. The price of the Pybus bonds if they receive an A rating will be $. (Round to the nearest cent.)
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