Bond Price: The market price of the bond based on its particular characteristics is called as bond price. It is the current discounted value of future cash flows Yield of a bond: It is total return on a bond to a bondholder till maturity. It is depicted as an annual rate. Simply it is the rate of return on an investment. To determine: The new yield based on higher rating and the new bond price.

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Chapter 6, Problem 7DC

Summary Introduction

Bond Price: The market price of the bond based on its particular characteristics is called as bond price. It is the current discounted value of future cash flows

Yield of a bond: It is total return on a bond to a bondholder till maturity. It is depicted as an annual rate. Simply it is the rate of return on an investment.

To determine:

The new yield based on higher rating and the new bond price.

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