Exhibit 21 -Refer to Exhibit 21

question 25

Multiple Choice

Exhibit 21.2
Use the Information Below for the Following Problem(S)
Assume you are the Treasurer for the Johnson Pharmaceutical Company and in late July 2004, the company is considering the sale of $500 million in 20-year debentures that will most likely be rated the same as the firm's other debt issues. The firm would like to proceed at the current rate of 8.5%, but you know that it will probably take until November to bring the issue to market. Therefore, you suggest that the firm hedge the pending issue using Treasury bond futures contracts which each represent $100,000.
$$\begin{array} { l c c } & \text { Casel } & \text { Case2 } \\ \text { Current Value - July 2004 } & 8.5 \% & 8.5 \% \\\text { Bond Rate } & 87.75 & 87.75 \\\text { Dec. 2004 Treasury Bonds } & & \\\text { Estimated Values - Nov. 2004 } & 9.5 \% & 7.5 \% \\\text { Bond Rate } & 85.60 & 91.65 \\\text { Dec. 2004 Trea5ury Bonds } &\end{array}$$
-Refer to Exhibit 21.2.How you would go about hedging the bond issue?

• A) Buy 5,000 contracts
• B) Buy 50,000 contracts
• C) Sell 5,000,000 contracts
• D) Sell 5,000 contracts
• E) None of the above

---

Definitions:

Learned Helplessness

An acquired (hence, learned) belief that one is unable to control one’s environment.

Middle Childhood

A developmental stage that encompasses approximately ages 6 to 12 years, characterized by significant growth in cognitive, social, and physical abilities.

Preschool Years

The period in a child's life prior to attending kindergarten, typically from ages 3 to 5, focusing on early development in social, cognitive, and motor skills.

Less Time Together

A phrase indicating that individuals or groups are spending a reduced amount of time in each other's company compared to before.