1. 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 bond = $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 $0.75 per year. b. If the price of the common stock increases from $23 to $46. 1) What will be the approximate return realized from investing in the convertible 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? 1. 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 bond = $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 $0.75 per year. b. If the price of the common stock increases from $23 to $46. 1) What will be the approximate return realized from investing in the convertible 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