Samson purchased 95 corporate bonds maturing in 15 years at market price of $850 that carries a 7.5% coupon with $1,000 face value. These corporate bonds pay coupon semi-annually and offer an option for bondholders to exchange one corporate bond for 50 shares of common stock.

One year later, when the interest rate changed significantly, the price of these corporate bonds increased to $965 and its stock price was $15. Samson immediately used the total amount received from the sale of these corporate bonds to acquire shares of mutual fund at its net asset value of $12.5 per share directly from a licensed mutual fund sponsor. Shares of mutual fund are issued and redeemed by the licensed mutual fund sponsor at the request of investors.

1. Name and describe the type of the corporate bond.

2. State the direction of change in interest rate leading to the corporate bond price changed from $850 to $965 in a year. Briefly explain.

3. Is the mutual fund an open-end or closed-end fund? List any TWO reasons to invest in mutual fund.

4. Assuming there is no transaction fee, calculate the amount received from the sales of the corporate bonds and number of shares of this mutual fund purchased by Samson.