1.Present value of an annuity (or bond, in this case, with semiannual coupon payments):
Suppose Ford Motor Company issued corporate debt (rated S&P BBB) on this basis:
Issue date: 12-08-2006
Maturity date: 12-08-2026
Coupon rate: 4.346 pct.
Price at issue = 100.
What is the yield to maturity (annualized) if the market price for this bond today is 102.3?
What is the current price for that same bond if the coupon rate were 7.5 percent and the yield to maturity were 4.68 percent?