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.
Over $1,100
Under $1,000
Under $900
Not enough information given to tell
2. Firm K is planning on merging with Firm L. Firm K currently has 5,500 shares of stock outstanding at a market price of $28 a share. Firm L has 500 shares outstanding at a price of $16 a share. The merger will create $600 of synergy. Firm K plans to offer a sufficient number of its shares to acquire Firm L at an acquisition cost of $8,200. How many total shares will be outstanding in the merged firm?
5,775
5,608
5,760
5,792
5,749