Pybus, Inc

interest payments
June 29, 2019
June 29, 2019

Pybus, Inc. is considering issuing bonds that will mature in 25years with an annual coupon rate of 7percent. 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 12

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 13

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

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