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QUESTION
Company X issues fixed income 30 year bonds with the following characteristics; If Company X is downgraded from AAA to A the coupon on the bond falls...
Company X issues fixed income 30 year bonds with the following characteristics; If Company X is downgraded from AAA to A the coupon on the bond falls from 4% to 3%. Company X is shifting credit risk from its balance sheet to those of the investors who buy the bonds.
