I just want to make sure that I'm correct, the answers I selected are in bold. If it doesn't show: 1. D (the risk-free rate plus a risk premium) 2. B (conversion) 3. C (par value) 4. B ($655.00) - For question 4, the table is attached. 1) Nominal rate of interest is equal to ________. A) the real rate plus an inflationary expectation B) the real rate plus a risk premium C) the risk-free rate plus an inflationary expectation D) the risk-free rate plus a risk premium 2) The ________ feature allows bondholders to change each bond into stated number of shares of stock. A) call B) conversion C) put D) swap 3) A $1,000, 8% bond sells for 980. $1,000 is called the ________. A) current value B) market value C) par value D) auction value Assume the below information to answer the following question(s). 4) Based on the table above, assume this bond's face value is $1,000. What is the bond's current market price? A) $65.00 B) $655.00 C) $650.00 D) $6,550.00
I just want to make sure that I'm correct, the answers I selected are in bold.
If it doesn't show:
1. D (the risk-free rate plus a risk premium)
2. B (conversion)
3. C (par value)
4. B ($655.00)
- For question 4, the table is attached.
1) Nominal rate of interest is equal to ________.
A) the real rate plus an inflationary expectation
B) the real rate plus a risk premium
C) the risk-free rate plus an inflationary expectation
D) the risk-free rate plus a risk premium
2) The ________ feature allows bondholders to change each bond into stated number of shares of stock.
A) call
B) conversion
C) put
D) swap
3) A $1,000, 8% bond sells for 980. $1,000 is called the ________.
A) current value
B) market value
C) par value
D) auction value
Assume the below information to answer the following question(s).
4) Based on the table above, assume this bond's face value is $1,000. What is the bond's current market price?
A) $65.00
B) $655.00
C) $650.00
D) $6,550.00
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