Question 2 (of 6) 2. Which security should sell at a greater price? a. An 8-year

Question

Question 2 (of 6) 2. Which security should sell at a greater price? a. An 8-year Treasury bond with a 9.50% coupon rate or an 8-year T-bond with a 10.50% coupon. An 8-year T-bond with a 10.5% coupon An 8-year Treasury bond with a 9.5% coupon rate b. A four-month expiration call option with an exercise price of $42 or a four-month call on the same stock with an exercise price of $37 A four-month call on the same stock with an exercise price of $37 .Aput option on a stock seling at S52 or a put option on another stock seling at S62. (AS other relevant features of the stocks and optans are assumed to be idenocal) A put option on another stock seling at $82 - A put option on a stock selling at $52 O Type here to search 9 2

Explanation / Answer

1. T bond with coupon of 10.5% rate because pv of cash inflow will be heigher for a bond with heigher coupon rate.

2. Call option with excercise option of 37 because lower the strike price heigher the benefit on excercise date.

3. Put option with price of 62 because stock price is more.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.