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You are a corporate finance analyst at Globe motors which is looking to repurchase some of its outstanding debt. The bond issue 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%, Global motors is a BBB+ company and the spread of BBB+ credit cover over 15-year US Government bonds is 1.25%

What is the appropriate yield-to-maturity or discount rate to value Global Motor’s bond issue?

What is the fair market price of the bond?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92781573

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