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    Evans Corporation Price of Bonds in four bond rating categories

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    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).

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    Solution Summary

    The expert examines Evans Corporation price of bond rating categories.

    $2.19

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