1. I constructed a $25,000,000 bond portfolio that yields 12.5% annually (but has only semi-annual bonds). Using the mid-term heuristic mentioned in the chapter, how much accrued interest will you have to pay to assemble this portfolio?
A. $781,250
B. $3,125,000
C. $1,562,500
D. $260,417
E. $520,833
F. $130,209
2. WMT 9s of 15 have a conversion price of $11.00. If this bond sells for $1,148 when the common stock is $8 per share, what is the bond’s premium over conversion value?
A. $259
B. $222
C. $421
D. $148
E. $727
F. $548