A bond's credit rating provides a guide to its price. In December 2020, Aaa bonds...
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Accounting
A bond's credit rating provides a guide to its price. In December 2020, Aaa bonds yielded 5.4%, and Baa bonds yielded 6.4%. Some bad news causes a 10% five-year bond to be unexpectedly downrated from Aaa to Baa. Assume face value is $1,000.
Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
A. What is the bond's price if it is rated as Aaa?
B. What is the bond's price if it is rated as Baa?
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