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Please answer these so I can verify that I got my answer correct 1) A convertible bond is a. like a straight bond plus a

Please answer these so I can verify that I got my answer correct

image text in transcribed 1) A convertible bond is a. like a straight bond plus a warrant, but the warrant in the convertible bond cannot be sold separately b. like stock plus a put option on the stock c. like stock plus a call option on a straight bond d. like a straight bond plus a call option on the stock e. A and B f. A and C g. A and D h. B and C i. B and D j. C and D k. all but A l. all but B m all but C . n. all but D o. all are true p. none are true 2) Hedging a. is like having insurance b. reduces return c. reduces risk d. is a trade-off between risk and return e. A and B f. A and C g. A and D h. B and C i. B and D j. C and D k. all but A l. all but B m all but C . n. all but D o. all are true p. none are true 3) Viewing things in terms of options a. stock can be viewed in terms of a put option on the firm's assets b. stock can be viewed in terms of a call option on the firm's assets c. insurance can be viewed in terms of a put option on the insured asset d. insurance can be viewed in terms of a call option on the insured asset e. A and B f. A and C g. A and D h. B and C i. B and D j. C and D k. all but A l. all but B m all but C . n. all but D o. all are true p. none are true 4) You ask a staff person to get you some financial information. The staffer returns with the following information: a stock is selling for $28.07, a call option expiring in 8 months with a strike price of $30 is selling for $2.60, and a put option expiring in 9 months with a strike price of $30 is selling for $2.01. a. surely the stock price is wrong b. surely the call value is wrong c. surely the put value is wrong d. surely the strike price is wrong e. A and B f. A and C g. A and D h. B and C i. B and D j. C and D k. all but A l. all but B m all but C . n. all but D o. all are true p. none are true 5 A bond can be redeemed by its owner for its face value after either 5 or 10 years. So at the end of 5 years, the bondholder must make a one-time choice to either redeem the bond then or let it continue for 5 more years. This complex financial security can be described as a. 10-year straight bond plus a 5-year call option on it b. a 10-year straight bond plus a 5-year put option on it c. a 5-year straight bond plus a 5-year call option on another 5- year straight bond d. a 5-year straight bond plus a 5-year put option on another 5- year straight bond e. A and B f. A and C g. A and D h. B and C i. B and D j. C and D k. all but A l. all but B m all but C . n. all but D o. all are true p. none are true 6 Suppose you own a convertible bond that has a 6.1% coupon (paid semi-annually), $1,000 par value, matures in 11 years, and is currently selling for $1,783.54 in the bond market. The bond can be converted into 38 shares of the firm's common stock, and the common stock is currently selling for $45.72 per share. What is this bond's yield to maturity? a. 0.7285 % b. 0.5129 % c. 0.3643 % d. 0.2547 % e 0.0000 . % f. 0.2547 % g 0.3643 . % h 0.5129 . % i. 0.7285 % 7 Suppose you own a convertible bond that has a 6.1% coupon (paid semiannually), $1,000 par value, matures in 11 years, and is currently selling for $1,783.54 in the bond market. The bond can be converted into 38 shares of the firm's common stock, and the common stock is currently selling for $45.72 per share. Should you convert the bond into shares of stock? Hint: Think carefully (in terms of the "big picture") before answering. You're answer should either start with "Yes, because" or "No, because." 8 A stock currently sells for $67.38. A call option expiring in 8 months with a strike price of $70 sells for $4.63. A put option with the same strike price and maturity sells for $5.93. What APY (effective annual) riskless rate of return is implied by these stock and option prices? a 1.8857 . % b 1.9220 . % c 2.3529 . % d 2.4851 . % e 2.6913 . % f. 2.8159 % g 2.8967 . % h 2.9736 . % i. 3.0279 % j. 3.1474 %

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