× Didn't find what you were looking for? Ask a question
Top Posters
Since Sunday
r
4
L
4
3
d
3
M
3
l
3
V
3
s
3
d
3
a
3
g
3
j
3
Home Q & A Board Other Fields Homework Help Business Finance
New Topic  
Aleja Aleja
wrote...
Go to Answer
Posts: 104
Rep: 0 0
6 years ago
A bond’s yield depends on several factors; one of those factors is risk. So, how do you assess a bond’s risk? For bonds, it is quite simple. Prior to a bond being issued, external rating agencies assign a credit rating that helps the investment banker “price” the issue, or set the coupon rate. Coupon bonds are typically “priced” to sell at par value at issuance. However, over time, the market rate of interest may change, or the risk of the company issuing the bond may change. When either of those factors change, the price of the bond will change and therefore change the yield to maturity of that bond for any investor buying the bond on the secondary market.
Go to the following site and look at bond ratings.

http://www.bondsonline.com/Bond_Ratings_Definitions.php

1. What is Standard & Poor’s highest bond rating and how does it impact coupon rates and the bond’s selling price?

2.  What would happen to the price of that bond if market rates of interest increased over the next two years?

3. How much would new issue bonds sell for with AAA ratings after interest rates increased?
Read 73 times
1 Reply
Reading and Writing About Contemporary Issues
Replies
Answer verified by a subject expert
shangshangshangshang
wrote...
#1
Posts: 110
Rep: 48 0
6 years ago
Sign in or Sign up in seconds to unlock everything for free
This verified answer contains over 150 words.

Related Topics

Aleja Author
wrote...

6 years ago
Helped a lot
SUmmerPeople
wrote...

Yesterday
Smart ... Thanks!
avance37
wrote...

2 hours ago
Thank you, thank you, thank you!
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  1996 People Browsing
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Related Images
  
 334
  
 2909
  
 958
Your Opinion
Which is the best fuel for late night cramming?
Votes: 231
Previous poll results: What percentage of nature vs. nurture dictates human intelligence?