Question: Problem 17 Intro A GM and a Ford bond both have 4 years to maturity, a $1,000 par value, a BB rating and pay interest

Problem 17

Intro

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 6.3%, while Ford has a coupon rate of 5.7%.

Attempt 1/5 for 10 pts.

Part 1

The GM bond trades at 88.04 (percent of par). What is the yield to maturity (YTM)?

Attempt 1/5 for 10 pts.

Part 2

What should be the price of the Ford bond (in $)?

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