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Given a required return of 5.5%, the value of an option-free, 10%, semi-annual pay bond with 12 years to maturity is $1,391.52. An option pricing model is used to determine the value of the option to call this bond after the fifth year. The model-predicted value of the call option is $35.21. If the option-free bond was callable, its predicted value would be:
A. $1,139.52
B. $1,426.73
C. $1,356.31
Answer: C
Explanation:
The value of a callable bond is less than the value of a similarly defined option-free bond by the value of the embedded call option.

NEW QUESTION: 2
In susceptible materials, the primary factor that affects sigma phase formation is the ________ at elevated temperatures.
A. Pressure
B. Velocity
C. Time of exposure
D. Stress
Answer: C

NEW QUESTION: 3
Which network element can act as router to external IP network?
A. CG.
B. SGSN.
C. GMSC.
D. GGSN.
Answer: D

NEW QUESTION: 4
A customer has decided that they want to deploy their application in the cloud using Red Hat OpenShift. They want isolated compute resources and by the hour billing. Which machine type should they choose?
A. Bring Your Own Server
B. Virtual Dedicated
C. Virtual Shared
D. Bare Metal
Answer: A


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