hat will be the price of these bonds if they receive either an A or a AA​ rating?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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 ​Pybus, Inc. is considering issuing bonds that will mature in

17

years with an annual coupon rate of

6

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

7.5

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

8.5

percent. What will be the price of these bonds if they receive either an A or a AA​ rating? 

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