Given the following bond listing for Ford Motor Credit Company, list and explain
ID: 2811395 • Letter: G
Question
Given the following bond listing for Ford Motor Credit Company, list and explain the debt characteristics (Credit (default) risk, Liquidity, Tax Status, Term to maturity, Call feature, Conversion feature) as they relate to this bond and if they are adding or subtracting from the yield on this bond.
OVERVIEW
Price:
$99.350 per $100 of par value
Coupon (%):
4.903%
Maturity Date:
20-Aug-2023
Yield to Maturity (%):
4.395
Current Yield (%):
4.278
Moody’s Ratings*:
Baa2
Coupon Payment Frequency:
Semi-Annual
First Coupon Date:
20-Feb-2019
Type:
Corporate
Callable:
No
OVERVIEW
Price:
$99.350 per $100 of par value
Coupon (%):
4.903%
Maturity Date:
20-Aug-2023
Yield to Maturity (%):
4.395
Current Yield (%):
4.278
Moody’s Ratings*:
Baa2
Coupon Payment Frequency:
Semi-Annual
First Coupon Date:
20-Feb-2019
Type:
Corporate
Callable:
No
Explanation / Answer
Answer )list and explainthe debt characteristics (Credit (default) risk, Liquidity, Tax Status, Term to maturity, Call feature, Conversion feature)
Market price: The trading price of bond available for sell or purchase , here the Bond is selling on discount .
Maturity Date : The day of exipary of bond , the issuer will repurchase bond from holders , here 5 years from today (2018) , dated 20-Aug-2023.
Collable : Bond can be repurchase by issuer before maturity date , the bond is non-collable.
Coupon rate of bond(CR) : 4.903% , yield to maturity(YTM) : 4.395%
By dint of selling the bond on discount , YTM < CR ,indicate bond have maturity price less than the face value , mature at discount.
Deafualt risk : the moody rating indicate the chances of default by bond, rating of Baa2 indicate a moderate risk involvement .
Tax status ; Bond is always subject to capital gain tax in long run with indexation benefit.
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