1. The Pioneer Petroleum Corporation has a bond outstanding with an $50 annual interest payment, a market price of $830, and a maturity date in five years. Assume the par value of the bond is $1,000.
A. Coupon Rate
B. Current Yield
C. Approximate yield to maturity
D. Exact yield to maturity
2. Use the Black-Scholes formula to find the value of a call option on the following stock:
Time to expiration = 6 months
Standard Deviation = 50% per year
Exercise price = $50
Stock price = $50 Interest rate = 3%