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 6.6%, while Ford has a coupon rate of 5.6%. The GM bond trades at 89.62 (percent of par). What is the yield to maturity (YTM)? What should be the price of the Ford bond (in $)?

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 6.6%, while Ford has a coupon rate of 5.6%. The GM bond trades at 89.62 (percent of par). What is the yield to maturity (YTM)? What should be the price of the Ford bond (in $)?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 4MC

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