Premium payback period

b. Suppose that the price of the common stock increases from $23 to $46. 1. What will be the approximate return realized from investing in the convert- ible bond? 2 What would be the return realized if $23 had been invested in the common stock? 3. Why would the return on investing in the common stock directly be higher than investing in the convertible bond? Suppose that the price of the common stock declines from $23 to $8.