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The Market Price of a 6

Question 10

Multiple Choice

The market price of a 6.5% coupon bond is 108 3/4. Its conversion price is $37.79. The associated stock sells for $36 and has a 0.56% annual dividend yield. The premium payback period is


A) about nine months.
B) about two years.
C) about three years.
D) about ten years.

Correct Answer:

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