According to an article in the Wall Street Journal, Ford recently had a very successful offering of Green Bonds. Specifically, Ford was looking to raise $1.75 billion through this offering of 10-year notes. The green bonds turned out to be extremely popular, leading to a very successful offering.a. It was originally thought that these BB-rated bonds would sell at a price so as to yield 6.375 %, but eventually, these bonds sold at a price so as to yield 6.15 %. Assuming these 10-year notes have annual coupons of $63.75 and a par value of $1,000, if the demand for the green bond offering was so strong as to drive the yield down to 6.15%, what was the price of the offering?b. How much did Ford save on this offering due to the fact that the high demand pushed the yield down from 6.375% to 6.15% (keeping the coupon at 6.375 %)?
According to an article in the Wall Street Journal, Ford recently had a very successful offering of Green Bonds. Specifically, Ford was looking to raise $1.75 billion through this offering of 10-year notes. The green bonds turned out to be extremely popular, leading to a very successful offering.a. It was originally thought that these BB-rated bonds would sell at a price so as to yield 6.375 %, but eventually, these bonds sold at a price so as to yield 6.15 %. Assuming these 10-year notes have annual coupons of $63.75 and a par value of $1,000, if the demand for the green bond offering was so strong as to drive the yield down to 6.15%, what was the price of the offering?b. How much did Ford save on this offering due to the fact that the high demand pushed the yield down from 6.375% to 6.15% (keeping the coupon at 6.375 %)?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:According to an article in the Wall Street Journal, Ford recently had a very successful offering of
Green Bonds. Specifically, Ford was looking to raise $1.75 billion through this offering of 10-year
notes. The green bonds turned out to be extremely popular, leading to a very successful offering.a. It
was originally thought that these BB- rated bonds would sell at a price so as to yield 6.375 %, but
eventually, these bonds sold at a price so as to yield 6.15 %. Assuming these 10-year notes have
annual coupons of $63.75 and a par value of $1,000, if the demand for the green bond offering was
so strong as to drive the yield down to 6.15%, what was the price of the offering?b. How much did
Ford save on this offering due to the fact that the high demand pushed the yield down from 6.375%
to 6.15% (keeping the coupon at 6.375 %)?
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