Ford Motor Company has issued bonds with a maturity date of November 1, 2046 that have a coupon rate of 7.40%, and coupon bonds with a maturity of February 15, 2047 that have a coupon rate of 9.80%. Why would Ford issue bonds with coupons of $74 and then a little more than a year later issue bonds with coupons of $98? Why didn't the company continue to issue bonds with the lower coupon? A. It is likely that Ford had to increase the coupon rate because both the price and interest rate fell. B. It is likely that Ford had to increase the coupon rate because either the price increased or the interest rate fell. OC. It is likely that Ford had to increase the coupon rate because either the price or the interest rate rose. OD. None of the above.

Ford Motor Company has issued bonds with a maturity date of November 1, 2046 that have a coupon rate of 7.40%, and coupon bonds with a maturity of February 15, 2047 that have a coupon rate of 9.80%. Why would Ford issue bonds with coupons of $74 and then a little more than a year later issue bonds with coupons of $98? Why didn't the company continue to issue bonds with the lower coupon? A. It is likely that Ford had to increase the coupon rate because both the price and interest rate fell. B. It is likely that Ford had to increase the coupon rate because either the price increased or the interest rate fell. OC. It is likely that Ford had to increase the coupon rate because either the price or the interest rate rose. OD. None of the above.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 20P

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