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Tommy told Betty what he learned in finance class today.
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1.      Tommy told Betty what he learned in finance class today. "Did

you know, Betty, that the feature of a bond where the issuer can redeem the bond from the holder in exchange for the face amount plus, in most cases, a premium is called a 'sinking fund' provision". Betty said, "what are you talking about! That is called a repo provision!" What do you think? Who is right - Tommy or Betty? Or, are they both right? Or, are both of them wrong? If both of them are wrong, what is it that Tommy and Betty are describing? (3 marks)
 
2.      Tim own shares of Good Dog Inc. Tim's friend Jennifer told Tim, "I heard that Good Dog Inc. is going to issue convertible bonds - at a price that doesn't seem much different from non-convertible bonds." When Tim heard this, he was mad.  Jennifer, on the other hand, is a conservative investor who is very old and depends on a steady income. She was happy. Describe why Tim might be unhappy and Jennifer might be happy. (3 marks)

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Subject: Business, Finance

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