On July 15, 2014 the Ford motor company (F) had a $ 2 billion bond issue outstanding that it issued the previous year The bonds have a $ 1,000 par value and pay a fixed coupon of 4 75 paid semi annually on July 15 and January 15 The bonds were due and payable January 15, 2043 a What is the promised...

tr msoheightsourceauto col msowidthsourceauto br msodataplacementsamecell style43 msonumberformat 000 000 00220022 msostylenameComma msostyleid3 style45 msonumberformat00220022 00000220022 ...

On July 15, 2014 the Ford motor company (F) had a $ 2 billion bond issue outstanding

Question:

On July 15, 2014 the Ford motor company (F) had a $ 2 billion bond issue outstanding that it issued the previous year. The bonds have a $ 1,000 and pay a fixed of 4.75% paid semi-annually on July 15 and January 15. The bonds were due and payable January 15, 2043.
a. What is the promised YTM on the bonds if they are selling for a price equal to
b. Assume now that the Federal Reserve Bank announces a drastic change in monetary policy that results in a 10% in the promised YTM for the bonds (i. e., if the previous YTM was 10%, the new YTM would be 11%). What is the new price for the bond? What is the percent change in bond price compared to the percent change in YTM?
c. Answer part b. where the bond is assumed to be January 15, 2029. d. What can you observe about the relationship between bond price volatility ( i. e., price changes in response to changes in YTM)?
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...