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Appropriate value of ford''s new corporate bond

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Ford is about to issue a new corporate bond, face value= $1,000, coupon rate 8% (Annual), term to maturity= 4 years. You know that a very similar bond issued by GM is already being traded in a bond market with its market price of $1020, face value =$1000, coupon 6% (Annual) and term to maturity = 4 years.

• What would be the appropriate value of Ford's new corporate bond? (Assume that coupons are paid annually by Ford and GM bonds.

Reference no: EM131332248

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