1. Dahlia Co. issued $1,000 par value bonds with a 4% coupon rate, convertible into 20 share of Dahlia common stock. If the market price of the bond is $1,100 and the stock is now at $45 per share and pays a $0.50 per share annual dividend. What is this bond’s payback period? 10.00 years 6.67 years 8.41 years 12.28 years
2. A bond has a yield to maturity of 4.5%, a duration of 14 years, and a 20 year maturity. By what percentage will the bond's price change if market interest rates increase by 0.5%? 6.70 percent -6.70 percent 7.66 percent -7.66 percent.