1. What is the future value at maturity in 8 years of a $1,000 zero coupon government bond that cost $635.25, if comparable yields today are 7%?
$582.01
$612.13
$724.33
$1,000.00
2. LMN Corporation is proposing to issue $10MM in 20 year bonds, 6.4%, with a conversion feature. The investment value of the convertible bond as debt takes into account:
I. The conversion value of the bond into common stock.
II. The current interest rate that is being paid on comparable, non-convertible, debt.
III. The requirement that principal be retired at maturity.
IV. The annual interest that is being paid by the bond.
I only
I and III
II, III & IV
I, III & IV