Early exercise of non-dividend paying american options

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Reference no: EM132047392

1. BCC has issued 9 7/8 percent debentures that will mature on July 15, Year 32. Assume that interest is paid and compounded annually. If an investor purchased a $1,000 denomination bond for $1,055 on July 15, Year 1, determine the bond’s yield-to-maturity. Round your answer to two decimal places.

2. Which statement best describes the early exercise of non-dividend paying American options? Early exercise may be advantageous for:

A) both deep in the money calls and deep in the money puts

B) deep in the money calls

C) deep in the money puts

Reference no: EM132047392

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