1. A 20-year bond pays 6% on a face value of $1,000. If similar bonds are currently yielding 5%, what is the market value of the bond? Use annual analysis.
A. Over $1,100
B. Under $1,000
C. Under $900
D. Not enough information given to tell
2. Maxwell Corp. is coming to the market with a new offering of 450,000 shares of stock at $22 to the public. Maxwell will receive $19 per share. The firm has 1 million shares outstanding and earnings of $6 million. What is the amount of dilution in earnings per share?
A. $1.86
B. $1.38
C. $1.77
D. No dilution occurs since new money is received by Maxwell.