Problem
Suppose Ford Motor Company issues a five year bond with a face value of $5,000 that pays an annual coupon payment of $150.
a. What is the interest rate Ford is paying on the borrowed funds?
b. Suppose the market interest rate rises from 3% to 4% a year after Ford issues the bonds. Will the value of the bond increase or decrease?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.