D Question 18 A corporate bond with a 4.0 percent coupon has 10 years left to maturity. It has had a credit rating of BBB and a yield to maturity of 6 percent. The firm has recently invested in a very profitable new project and the rating agency is upgrading the bonds to A. The new appropriate discount rate will be 5 percent. What will be the change in the bond's price in dollars? Assume interest payments are paid annually and par value is $1,000. Hint: Estimate the first price, estimate the second price, and take the difference.
a. $ 70.34
b. $69.98
c. $65.22
d. $67.85