Suppose You Find Two Bonds Identical in All Respects Except

question 15

Multiple Choice

Suppose you find two bonds identical in all respects except that Bond A is convertible to common stock and Bond B is not.Bond A is priced at $1,245 and Bond B is priced at $1,120.Bond A has a promised yield to maturity of 5.6% and Bond B has a promised yield to maturity of 6.7%.The stock of Bond A is trading at $49.80 per share.Which of the following statements is/are correct?
I.The value of the conversion option for Bond A is $125.
II.The lower promised yield to maturity of Bond A indicates that the bond is priced according to its straight debt value rather than its conversion value.
III.Bond A can be converted into 25 shares of stock.

• A) II only
• B) I and III only
• C) III only
• D) I, II and III

Learn the indirect method for calculating net cash flow from operating activities.

Identify the classification of transactions in the statement of cash flows such as operating, investing, and financing activities.

Understand how changes in current assets and liabilities affect cash flows from operating activities.

Determine the cash effects of transactions involving assets purchases and sales.

---

Definitions:

Sexual Activities

Behaviors that involve the stimulation of the body's sexual organs or arousal, whether through physical contact, visual stimulation, or fantasy.

Oral Contraceptives

Medications taken by mouth to prevent pregnancy, containing hormones that inhibit ovulation, change cervical mucus, and alter the uterine lining.

Casual Sex

Casual Sex refers to sexual activities that occur outside of a traditional romantic relationship without expecting or demanding any commitments to one another.

Permissive Attitudes

A mindset characterized by tolerance or acceptance of behaviors typically considered unconventional or taboo.