**FIN 351 DeVry Week 5 Homework Assignment**

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**FIN 351 DeVry Week 5 Homework Assignment**

**FIN351**

**FIN 351 DeVry Week 5 Homework Assignment**

**FIN 351 DeVry Week 5 Homework Assignment**

Answer the following items from your textbook.

- Chapter 13 Discussion Question 1
- Chapter 13 Problem 1
- Chapter 14 Discussion Question 3
- Chapter 14 Discussion Question 11
- Chapter 14 Problem 2
- Chapter 14 Problem 3
- Chapter 15 Discussion Question 7
- Chapter 15 Discussion Question 14
- Chapter 15 Problem 3
- Chapter 16 Discussion Question 1
- Chapter 16 Discussion Question 6

Submit your answers in a Word document to the Week 5 Assignments Dropbox.

Submit your assignment to the Dropbox, located at the top of this page. For instructions on how to use the Dropbox, read these .equella.ecollege.com/file/8ff9f27a-3772-48cf-9855-4bec4e6706bf/1/Dropbox.html”>step-by-step instructions.

See the Syllabus section “Due Dates for Assignments & Exams” for due date information.

- Why would an investor be interested in convertible securities? (What do they offer to the investor?)
- A convertible bond has a face value of $1,000, and the conversion price is $50 per share. The stock is selling at $42 per share. The bond pays $60 per year interest and is selling in the market for $930. It matures in 15 years. Market rates are 10 percent per year.
- What is the conversion ratio?
- What is the conversion value?
- What is the conversion premium (in dollars and percent)?
- What is the floor value or pure bond value?
- What is meant by the exercise or strike price on an option?
- What are two option strategies to take advantage of an anticipated decline in stock prices? (Relate one to call options and the other to put options.)
- Look at the option quotes in Table 14–2 on page 368.
- What is the closing price of the common stock of SINGLE Systems?
- What is the highest strike price listed?
- What is the price of a December 20 call option?
- What is the price of a January 22.50 put option?
- Assume a stock is selling for $66.75 with options available at 60, 65, and 70 strike prices. The 65 call option price is at $4.50.
- What is the intrinsic value of the 65 call?
- Is the 65 call in the money?
- What is the speculative premium on the 65 call option?
- What percentage does the speculative premium represent of common stock price?
- Are the 60 and 70 call options in the money?
- How does the concept of margin on a commodities contract differ from that of margin on a stock purchase?
- How can using the financial futures markets for interest rates and foreign exchange help financial managers through hedging? Briefly explain, and give one example of each.
- Sterling Jones purchases a 5,000 troy ounce contract on silver at $13.00 an ounce. At the same time he purchases an 112,000 pound sugar contract at 0.191 cents a pound. If the price of silver goes down to $12.94 at the same time the price of sugar goes up to 0.196 cents, will Sterling have an overall net gain or loss?
- Why are stock index futures and options sometimes referred to as derivative products? Why do some investors believe derivative products make the markets more volatile? “
- Why is it unrealistic for a portfolio manager to sell a large portion of his portfolio if he thinks the market is about to decline?