1 suppose xyz is priced at 125 a share the 150 call has six, Ask an Expert

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1. Suppose XYZ is priced at $125 a share. The 150 call has six months to expiration and is quoted at $.05. Why do you suppose investors would be willing to purchase a call that is so far out of the money?

2. Explain whether the following statement is true or false: “Only weak companies issue debentures”. Why there is a yield spread between a corporate bond and a Treasury bond?

3. Assume the same risk for 30-year AAA Corporate bonds and 30-year Municipal Bonds. If you are indifferent between the two bonds what is your implied marginal tax rate?

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Financial Management, Finance

Category:- Financial Management
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