A GM and a Ford bond both have 4 years to maturity, a $1, 000 par value, a BB rating and pay interest semiannually. GM has a coupon rate of 6.3%, while Ford has a coupon rate of 5%. The GM bond trades at 92.35 (percent of par). What is the yield to maturity (YTM)? What should be the price of the Ford bond (in $) ?
A GM and a Ford bond both have 4 years to maturity, a $1, 000 par value, a BB rating and pay interest semiannually. GM has a coupon rate of 6.3%, while Ford has a coupon rate of 5%. The GM bond trades at 92.35 (percent of par). What is the yield to maturity (YTM)? What should be the price of the Ford bond (in $) ?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 4MC
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A GM and a Ford bond both have 4 years to maturity, a $1, 000 par value, a BB rating and pay interest semiannually. GM has a coupon rate of 6.3%, while Ford has a coupon rate of 5%. The GM bond trades at 92.35 (percent of par). What is the yield to maturity (YTM)? What should be the price of the Ford bond (in $) ?
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