2. 24.2 Convertible bonds International Grill Corporation (IGC), publisher of BBQ Monthly magazine, has a $1 000 face value convertible bond issue that is currently selling in the market for $950. Each bond can be exchanged for 100 shares at the holder’s option.

The bond has a 7 per cent coupon, payable annually, and it will mature in 10 years. IGC’s debt is BBB-rated. Debt with this rating is priced to yield 12 per cent. Shares in IGC are trading at $7 per share.

What is the conversion ratio on this bond? The conversion price? The conversion premium? What is the floor value of the bond? What is its option value?