You are a corporate finance analyst at global motors which, Ask an Expert

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You are a Corporate Finance Analyst at Global Motors which is looking to repurchase some of its outstanding debt. The bond issue you are considering has 15 years remaining until its maturity; pays an annual coupon of 6% and has a par value = $1,000. The yield-to-maturity of 15 year US Government Treasury Bonds is 4.5%. Globals Motors is a BBB+ company and the spread of BBB+ credit over 15-year US Gov’t Bonds is 1.25%.

a. What is the appropriate yield-to-maturity or discount rate to value Global Motors’ bond issue?

b. What is the fair market price of the bond?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92781544

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