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Question Last year, a company issued 6% coupon rate 10-year bonds. These bonds were trading at $1,000 face value at time of issue. Between last year and this year, the company’s default spread increased by 1%, but nothing else changed. This year, the company’s bonds will most likely be trading at: A) $1,000 C) $1,000 D) cannot determine

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Question

Last year, a company issued 6% coupon rate 10-year bonds. These bonds were trading at $1,000 face value at time of

issue. Between last year and this year, the company’s default spread increased by 1%, but nothing else changed. This year, the company’s bonds will most likely be trading at:

A) < $1,000

B) > $1,000

C) $1,000

D) cannot determine

 
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