In: Finance
Given two pairs of securities which pair (select one from group A and one from group B) should sell at a greater price?
A. An 8-year Treasury bond with a 10.25% coupon rate or an 8-year T-bond with a 9.25% coupon.
1.) An 8-year T-bond with a 9.25% coupon
2.) An 8-year Treasury bond with a 10.25% coupon rate
B. A four-month expiration call option with an exercise price of $36 or a four-month call on the same stock with an exercise price of $41.
1.) A four-month expiration call option with an exercise price of $36
1.) A four-month call on the same stock with an exercise price of $41
A. |
The 8-year Treasury bond with a 10.25% coupon rate and the call with the lower exercise price: The expiration call with the exercise price of $36. |
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B. |
The 8-year Treasury bond with a 10.25% coupon rate and the call with the higher exercise price: The expiration call with the exercise price of $41. |
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C. |
The 8-year Treasury bond with a 9.25% coupon rate and the call with the higher exercise price: The expiration call with the exercise price of $41. |
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D. |
The 8-year Treasury bond with a 9.25% coupon rate and the call with the lower exercise price: The expiration call with the exercise price of $36. |