The ABC Company has $100,000,000 of.08 convertible bonds outstanding. Each $1,000 bond is convertible into 50 shares
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The ABC Company has $100,000,000 of.08 convertible bonds outstanding. Each $1,000 bond is convertible into 50 shares of common stock. The common stock is paying $.90 per share per year cash dividend. The stock is selling for $70 per share. There are 500,000,000 shares outstanding.
The corporate tax rate is .35 and ordinary income is taxed at .396.
The investor is an individual. Should the investor who owns a bond convert? Should the fum force conversion by calling?
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