Answer the below questions. a. Suppose that a convertible bond has a conversion ratio of 20 and
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a. Suppose that a convertible bond has a conversion ratio of 20 and a delta of 0.70. For a price change of $0.125 for the stock price per share, what is the approximate change in the convertible bond’s value?
b. How many shares of the stock must be shorted in order to create a market neutral position by holding the convertible bond and shorting the stock?
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a The delta is used to estimate the impact of a change in the price per share of the under...View the full answer
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