A bond’s credit rating provides a guide to its risk. Long-term bonds rated Aa currently offer yields to maturity of 9.7%. A-rated bonds sell at yields of 10%. Assume a 10-year bond with a coupon rate of 9.2% is downgraded by Moody’s from Aa to A rating.

A bond’s credit rating provides a guide to its risk. Long-term bonds rated Aa currently offer yields to maturity of 9.7%. A-rated bonds sell at yields of 10%. Assume a 10-year bond with a coupon rate of 9.2% is downgraded by Moody’s from Aa to A rating.

a.	Calculate the initial price. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Initial price

$

b.	Calculate the new price. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

New price

$