Solved: Appropriate value of fords new corporate bond, Finance Basics

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Appropriate value of fords new corporate bond

Question:

Ford is about to issue a new corporate bond, face value = $1,000, coupon rate=8%, maturity = 4 years (annual coupon payments). You know that a very similar bond issued by GM is already trading in the bond market with price = $1020, face value = $1,000, coupon rate = 6% and maturity = 5 years (annual coupon payments). What would be the appropriate value of Ford's new corporate bond?

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Finance Basics: Appropriate value of fords new corporate bond

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Finance Basics: Appropriate value of fords new corporate bond

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