Final answer:
The next coupon payment for a semi-annual coupon bond last paid on January 15, 2017, would be on July 15, 2017. For a $5,000 bond issued by Ford Motor Company with a $150 annual coupon, the interest rate is 3%. If market interest rates rise to 4%, the value of this bond will decrease.
Step-by-step explanation:
If the last coupon for a semi-annual coupon bond was paid on January 15, 2017, the next coupon would be paid six months later, which is July 15, 2017. Semi-annual coupon bonds pay interest twice a year, and assuming there are no adjustments for weekends or holidays, this would be the standard six-month interval.
Regarding the Ford Motor Company question, if the company issues a five-year bond with a face value of $5,000 that pays an annual coupon payment of $150, the interest rate (also called the coupon rate) Ford is paying on the borrowed funds is calculated as the coupon payment divided by the face value of the bond. Hence, the interest rate is $150 / $5,000, which equals 3%.
If the market interest rate rises from 3% to 4%, the value of the bond will decrease. This is because the bond's fixed interest payments are now less attractive compared to new bonds issued at the higher current market rate. Investors seeking the best returns would prefer new bonds with the 4% rate over the existing bond with a 3% rate, thus driving down the price of the existing bond.