For Questions 1 - 10, assume the position of an intern at the corporate finance division of Ford Motor Company and advice the company on a series of debt-raising alternatives it is considering. Ford is actually planning to issue $150 million worth of 6% annual coupon bonds with a 10-year maturity, but it is interested in knowing its prospects for raising those funds under a series of different scenarios. To help Ford prepare these scenarios, you will have to find out what is Ford's current debt rating and the yield curve for its particular rating. For this, follow the outlined steps shown next.

5. Get a free username for www.standardandpoors.com, access the website and obtain the bond rating S&P has currently given to Ford Motor Co.s Senior Unsecured Corporate debt in USD. What is the grade of such a rating? Is the probability of default currently high or low?

6. Assuming a Face Value of $1,000 and using all the data secured online thus far, calculate the fair value of the bond Ford intends to issue, discounting each one of the expected cash flows using the corresponding rate from the term structure data you constructed in Question 4. Assume Ford will preserves its current S&P debt rating for the foreseeable future. How many bonds will Ford need to sell to raise the desired funds? What will be the bond's Yield To Maturity and Current Yield?

7. Repeat the process in Question 6, but now assume that S&P will improve Ford's rating to the next notch available in the dataset. What will be the bond's fair price, Yield To Maturity, and Current Yield? How many bonds will Ford need to issue now to be able to raise the desired funds?