You Own a Bond That Has a Face Value of $1,000

question 43

Multiple Choice

You own a bond that has a face value of $1,000 and a conversion ratio of 25. You have just received notification that the bond is being called at a premium of $40. The stock price is $41.20 a share. You should _____ your bond because the conversion value is _____.

• A) convert; less than the call price by $40.00
• B) convert; greater than the call price by $40.00
• C) convert; greater than the call price by $4.75
• D) not convert; less than the call price by $10.00
• E) not convert; greater than the call price by $40.00

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Definitions:

Observational Models

Learning through observing the behaviors of others and the outcomes of those behaviors, also known as social learning.

Operant Chambers

Enclosures used to study animal behavior through operant conditioning, featuring mechanisms for delivering reinforcements and punishments.

Conditioned Stimulus

A previously neutral stimulus that, after being paired with an unconditioned stimulus, evokes a conditioned response.