ABC Corp.s 20-year $1,000 par value bond has an coupon rate of 10%, paid annually. The current market rate on similar 20-year bonds is 8%. Which statement regarding ABCs bond price is true?

Select one:

a. The ABC bond is currently selling at its par value.

b. If market interest rates falls to 7%, the price of the ABC bond will also fall.

c. The ABC bond is currently selling at a price above its par value.

d. The ABC bond is currently selling at a price below its par value.

Clear my choice

2 StormTech has $1,000 convertible bonds with a coupon rate of 10% paid annually, that has 10 years

to maturity. The bond is convertible into 30 shares of StormTech. The current interest rate on similar bonds without the convertible option is 8.6%. The current stock price of StormTech is $45.

a. What is the bonds straight-debt value?

3 What is StormTech bonds conversion value? $

4 What is the floor price for the StormTech bond?

5 Five-year Government Treasury bonds yield 5.3%. The inflation premium (IP) is 2%, and the maturity risk premium (MRP) on all 5-year bonds is 0.2%.

What is the real risk-free rate,