Question
6. A bond has a face value of $1,000 and a coupon rate of 8%. The bonds quoted price is 93.75. a) What is the
6. A bond has a face value of $1,000 and a coupon rate of 8%. The bonds quoted price is 93.75.
a) What is the bonds price in dollars?
b) The bond makes annual coupon payments. The bond made its last coupon payment 25 days ago. If the bond is sold today, what is the accrued interest? (Use actual/actual to count days.)
7. You own a European call option on a stock. You paid a premium of $3 to buy the call. The strike price is $50. Today is the calls expiration date. The spot price of the stock is $65. Should you exercise the call? What is your profit or loss?
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