Using the mid-term heuristic mentioned in the chapter how


1. I constructed a $25,000,000 bond portfolio that yields 12.5% annually (but has only semi-annual bonds). Using the mid-term heuristic mentioned in the chapter, how much accrued interest will you have to pay to assemble this portfolio?

A. $781,250

B. $3,125,000

C. $1,562,500

D. $260,417

E. $520,833

F. $130,209

2. WMT 9s of 15 have a conversion price of $11.00. If this bond sells for $1,148 when the common stock is $8 per share, what is the bond’s premium over conversion value?

A. $259

B. $222

C. $421

D. $148

E. $727

F. $548

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Financial Management: Using the mid-term heuristic mentioned in the chapter how
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