Unformatted text preview: 7.8%, then at what rate should Rollincoast expect to issue new bonds? Calculate the previous risk premium, RP BBB , and new RP BBB : RP BBB = 11.5% - 8.7% = 2.8%. New RP BBB = 2.8%/2 = 1.4%. Calculate new YTM on BBB bonds: YTM BBB = 7.8% + 1.4% = 9.2%....
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- Spring '10
- Actuarial Science, BBB Bonds, Rollincoast Incorporated