Ford Motor Company has issued bonds with a maturity date of November 1, 2046 that have a coupon rate of 7.40%, and coupon bonds with a maturity of February 15, 2047 that have a coupon rate of 9.80%. Why would Ford issue bonds with coupons of $74 and then a little more than a year later issue bonds with coupons of $98? Why didn't the company continue to issue bonds with the lower coupon? A. It is likely that Ford had to increase the coupon rate because both the price and interest rate fell. B. It is likely that Ford had to increase the coupon rate because either the price increased or the interest rate fell. OC. It is likely that Ford had to increase the coupon rate because either the price or the interest rate rose. OD. None of the above.

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
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Ford Motor Company has issued bonds with a maturity date of November 1, 2046 that have a coupon rate of 7.40%, and coupon bonds with a maturity of February 15,
2047 that have a coupon rate of 9.80%. Why would Ford issue bonds with coupons of $74 and then a little more than a year later issue bonds with coupons of $98? Why
didn't the company continue to issue bonds with the lower coupon?
A. It is likely that Ford had to increase the coupon rate because both the price and interest rate fell.
B. It is likely that Ford had to increase the coupon rate because either the price increased or the interest rate fell.
C. It is likely that Ford had to increase the coupon rate because either the price or the interest rate rose.
D. None of the above.
Transcribed Image Text:Ford Motor Company has issued bonds with a maturity date of November 1, 2046 that have a coupon rate of 7.40%, and coupon bonds with a maturity of February 15, 2047 that have a coupon rate of 9.80%. Why would Ford issue bonds with coupons of $74 and then a little more than a year later issue bonds with coupons of $98? Why didn't the company continue to issue bonds with the lower coupon? A. It is likely that Ford had to increase the coupon rate because both the price and interest rate fell. B. It is likely that Ford had to increase the coupon rate because either the price increased or the interest rate fell. C. It is likely that Ford had to increase the coupon rate because either the price or the interest rate rose. D. None of the above.
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