ed to Checkpoint 9.3) (Bond valuation) Pybus, Inc. is considering issuing bonds that will mature in 23 years with an annual coupon rate of ating on its bonds and, if it does, the yield to maturity on similar AA bonds is 11.5 percent. However, Pybus is not sure whether the new bonds will be the price of these bonds if they receive either an A or a AA rating? a price of the Pybus bonds if they receive a AA rating will be $. (Round to the nearest cent)

ed to Checkpoint 9.3) (Bond valuation) Pybus, Inc. is considering issuing bonds that will mature in 23 years with an annual coupon rate of ating on its bonds and, if it does, the yield to maturity on similar AA bonds is 11.5 percent. However, Pybus is not sure whether the new bonds will be the price of these bonds if they receive either an A or a AA rating? a price of the Pybus bonds if they receive a AA rating will be $. (Round to the nearest cent)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 4P

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Pybus, Inc. is considering issuing bonds that will mature in 23years with an annual coupon rate of 9 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 7percent. 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 8 percent. What will be the price of these bonds if they receive either an A or a AA rating? The price of the Pybus bonds if they receive a AA rating will be $__________ (Round to the nearest cent.)
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