Pioneer petroleum corporation has bond outstanding

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Reference no: EM131898684

1. The Pioneer Petroleum Corporation has a bond outstanding with an $50 annual interest payment, a market price of $830, and a maturity date in five years. Assume the par value of the bond is $1,000.

A. Coupon Rate

B. Current Yield

C. Approximate yield to maturity

D. Exact yield to maturity

2. Use the Black-Scholes formula to find the value of a call option on the following stock:

Time to expiration = 6 months

Standard Deviation = 50% per year

Exercise price = $50

Stock price = $50 Interest rate = 3%

Reference no: EM131898684

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