Explore BrainMass

Explore BrainMass

    Evans Corporation Price of Bonds in four bond rating categories

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The yield to maturity for 25-year bonds is as follows for four different bond rating categories:

    Aaa - 9.4%
    Aa1 - 9.6%
    Aa2 - 10.0%
    Aa3 - 10.2%

    The bonds of Evans Corporation were rated as Aal and issued at par a few weeks ago. The bonds have been downgraded to Aa2. Determine the new price of the bonds, assuming a 25-year maturity and semi-annual interest payments. (As a first step, use the data above as a guide to appropriate interest rates for bonds with different ratings).

    © BrainMass Inc. brainmass.com June 4, 2020, 12:00 am ad1c9bdddf

    Solution Summary

    The expert examines Evans Corporation price of bond rating categories.