Yesterday, bonds for Cougar Cremary were traded for the yield-to-maturity of 7.2
ID: 2820508 • Letter: Y
Question
Yesterday, bonds for Cougar Cremary were traded for the yield-to-maturity of 7.28%, which were downgraded by S&P from A to BBB today. If everything else is constant from yesterday (expected inflation rate etc.):
the bonds' yield-to-maturity should be higher than 7.28%.
the bonds' coupon rate should be higher than 7.28%.
the bonds' current yield should be higher than 7.28%.
the bonds' price should increase.
All of the above
None of the above
the bonds' yield-to-maturity should be higher than 7.28%.
the bonds' coupon rate should be higher than 7.28%.
the bonds' current yield should be higher than 7.28%.
the bonds' price should increase.
All of the above
None of the above
Explanation / Answer
Option A
If everything else is constant from yesterday (expected inflation rate etc.): the bonds' yield-to-maturity should be higher than 7.28% and price should decrease and coupon rate would remain constant and current yield woudl increase.
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