Evaluate the promised YTM for the bonds is-sued by Ford (F) bonds issued by Ford (F) and

Question:

Evaluate the promised YTM for the bonds is-sued by Ford (F) bonds issued by Ford (F) and General Motors (GM). You may assume that interest is paid semi-annually. Also, round the number of periods to the nearest six months.

Noting that both these bond issues have similar ratings, comment on the use of the yield to maturity you have just calculated as an estimate of the cost of debt financing to the two firms.

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