The current market price should be closest

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1. Given that a bond matures in 5 years with a coupon of 7% paid semi-annually and a yield to maturity of 9%, the current market price should be closest to __________.

a. $1000.00

b. $870.63

c. $1,841.75

d. $920.87

2. Assume that the current stock price is $25 per share, the exercise price is $26 per share, the risk-free rate is 2.00%, time to expiration is 9 months and the standard deviation of the underlying stock price is 20%. The current call option price should be closest to:

a. $1.00

b. $1.46

c. $2.07

d. $0

3. The common stock of Bike Tours, Inc. pays no dividend, and has a market price of $80 per share. Bike Tours' 8% ($80 annual coupon) convertible bond sells at 128% of the par value ($1280), and is convertible into common at a stock price of $100 per share. The conversion premium for Bike Tours' convertible bond is __________.

a. $1000

b. $800

c. $280

d. $480

Reference no: EM132053449

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