2b. You have a choice of investing in two identical bonds: C and N. These two bonds are identical except C is callable a

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2b You Have A Choice Of Investing In Two Identical Bonds C And N These Two Bonds Are Identical Except C Is Callable A 1 (48.15 KiB) Viewed 97 times

2b. You have a choice of investing in two identical bonds: C and N. These two bonds are identical except C is callable and N is non-callable. In general, witch bond will provide you higher yield? Why? (2 points) 3. After the peak of the COVID-19 crisis, the economy is now growing significantly. What specific monetary policy actions are available to many Central Banks to slowdown the economy? (no description is necessary) (1.5 points) 4. You sold T-bill futures contracts when the quoted price was 92.50. When this position was closed out later, the quoted price was 91.50. Determine the profit or loss per contract ($1,000,000), ignoring transaction costs. (show your work) (2 points) 5a. You buy a call option on ROCK stock with an exercise price of $96. Today, the stock's price is $95. The premium on the call option is $3. Just before expiration, the stock's price is $100. Will you exercise the option? What is your net profit or loss? What is the break-even price? (show your work) (2.5 points) 5b. You sell a put option on ROLL stock with an exercise price of $97. Today, the stock's price is $95. The premium on the put option is $2. Just before expiration, the stock's price is $94. Will the option be exercised? What is your net profit or loss? What is the break-even price? (show your work) (2.5 points) 5c. What is the maximum potential gain from selling a put option? Explain. (1.5 points)