Question
Ford Motor Co. has a bond outstanding (symbol: F.GN) with a coupon rate of 7.5% payable semi-annually and a maturity date of 08/01/2026. The yield
Ford Motor Co. has a bond outstanding (symbol: F.GN) with a coupon rate of 7.5% payable semi-annually and a maturity date of 08/01/2026. The yield on the bond today is 5.323%. a. What is the price of the bond? b. Set up a data table showing what happens to the price as the yield moves from 2.323% to 8.323% in steps of 0.1%. Plot this. Write down your conclusion from the graph. c. Suppose the yield increases by 0.20%. What is the % change in the price of the bond? For this, make an entry titled yield change and set a value of 0.20%. d. Using the formula in (c), set up a data table showing what happens to the % change in price as you change the maturity date from 08/01/2019 to 08/01/2059 in steps of one year. Plot this. Write down your conclusion from the graph. e. Using the formula in (c), set up a data table showing what happens to the % change in price as you change the yield increase from -2.0% to +2.0% in steps of 0.1%. Plot this. Write down your conclusion from the graph. f. Using the formula in (c), set up a data table showing what happens to the % change in price as you change the coupon rate from 4.5% to 10.5% in steps of 0.1%. Plot this. Write down your conclusion from the graph.
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