Let

$$

s say Ford Motor Company issued some bond three years ago, in October

$2018.$

$$Ford was rated Baa

$2$

$/$

BBB by Moody

$$

s at the time of the issue.

Here are the terms:

Issue Amount: $

$3\mathrm{.}00$

$$billion

Term:

$8$

$$years

Coupon:

$5\mathrm{.}25$

$\%$

$$paid annually

Principal: at maturity

Kd

$=$

$5\mathrm{.}75$

$\%$

Krf

$=$

$$Risk Free Rate:

$2\mathrm{.}09$

$\%$

$-$

$$October

$1$

$,$

$2016$

$$How many zero coupon bonds are there in this bond structure? What is the current market price of the bond

$$

$$show work?

$-$

$4$

b

$.$

$)$

$$What is the present value of the stripped bond? What is the present value of the coupon strip?

$-$

$4$

c

$.$

$)$

$$What is the current yield on the bond? What is the yield to maturity of this bond?

$-$

$4$

d

$.$

$)$

$$What is the Macaulay duration; what is the Modified duration of the bond? What does the Macaulay duration calculation tell you?

$-$

$4$