Below is the listing of a bond issued by Ford Motor Company (F). Below the detail of the bond is the information on a recent sale of part of the bond issue.

1. Explain what the price of $110.529 on a $100 par value bond means in this purchase.

2. Explain how the yield to maturity of 5.267% is calculated.

3. Contrast that with the calculation of the current yield of 5.994%.

4. Explain why it matters to know if the bond pays interest monthly, semi-annually or annually.

5. This bond does not mature for almost 10 years. Explain the concept of interest rate risk in context with this bond for both the issuer and the investor.

Rating - Baa/BBB, Moodys

Issuer CUSIP Ford Motor Company (F)

Coupon 6.625%

Maturity 10/01/2028

Price - $110.529

Yield to Maturity 5.267%

Current Yield 5.994%

Dated 04/01/1999

Minimum Size 5K

Coupon Paid Semi-Annual

Callable - No