1. A company has $1 million outstanding debentures with nine years to maturity. Debentures currently outstanding were sold at a face value of $100 and a coupon rate of 10% per annum. A merchant banker suggests that a new issue would required a coupon rate of 8% per annum to be fully subscribed on similar terms.

The current market value of the debentures is:

a. $10,237,846

b. $5,396,429

c.$2,364,827

d.$1,124,938

2.The variance of a portfolio does not depend on:

A.the proportion of the current market value of the portfolio constituted by each security.

B.the variance of the possible returns of each security.

C.the total market value of the portfolio.

D.the correlation between possible returns on the securities held in the portfolio.