Consider a convertible bond as follows: par value = $1,000 coupon rate 9.5% market price of convertible
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Consider a convertible bond as follows: par value = $1,000 coupon rate 9.5% market price of convertible bond $1,000 conversion ratio=37.383 estimated straight value of bood $510 yield to maturity of straight bond - 18.7% Assume that the price of the common stock is $23 and that the dividend per share is 50.75 per year.
a. Calculate each of the following: 1. Conversion value 2. Market conversion price 3. Conversion premium per share 4. Conversion premium ratio 5. Premium over straight value 6. Favorable income differential per share AppendixLO1
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