A bond investor values AAA bonds at $5,000 each and values AA bonds at $1,500 each

Business Nov 24, 2022

A bond investor values AAA bonds at $5,000 each and values AA bonds at $1,500 each. Sellers of AAA bonds value them at $2,500 and sellers of AA value them at $500. If the investor cannot observe the bonds type prior to purchase, but believes that 40% are AAA, then the maximum price the investor will pay is ____ and ____ will trade.