Ch 05 Bonds, Bond Valuation, and Interest Rates

The callable bond will be called if rates fall far enough below the coupon rate, but it will not be called otherwise. Thus, the call provision can only harm bondholders. ... The rating agencies change the bond's rating from Baa to Aaa. ... A 10-year corporate bond has an annual coupon of 9%. The bond is currently selling at par ($1,000). ................
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