Pybus, Inc. is considering issuing bonds that will mature in 23years with an annual coupon rate of 9 percent. Their par value will be ​$1,000​, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds​ and, if it​ does, the yield to maturity on similar AA bonds is 7percent. ​  However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A​ rating, the yield to maturity on similar A bonds is 8 percent. What will be the price of these bonds if they receive either an A or a AA​ rating?   The price of the Pybus bonds if they receive a AA rating will be ​$__________​ (Round to the nearest​ cent.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
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Pybus, Inc. is considering issuing bonds that will mature in 23years with an annual coupon rate of
9 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 7percent. ​ 
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 percent. What will be the price of these bonds if they receive either an A or a AA​ rating?
 
The price of the Pybus bonds if they receive a AA rating will be ​$__________​ (Round to the nearest​ cent.)
 
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