The Surplus Value Company had $10 million (face value) of convertible bonds outstanding in 2015. Each bond

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The Surplus Value Company had $10 million (face value) of convertible bonds outstanding in 2015. Each bond has the following features.

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a. What is the bond?s conversion value?

b. Can you explain why the bond is selling above conversion value?

c. Should Surplus call? What will happen if it does so?

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Principles of Corporate Finance

ISBN: 978-1260013900

13th edition

Authors: Richard Brealey, Stewart Myers, Franklin Allen

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