Question
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 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 6.5%, while Ford has a coupon rate of 5.4%.
The GM bond trades at 94.95 (percent of par). What is the yield to maturity (YTM)?
What should be the price of the Ford bond (in $)?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 6th Edition
324664559, 978-0324664553
