1. There is a convertible bond with the following features:

• par = $1,000

• coupon = 6.56%

• maturity = 10 years

• conversion price (Pc) = $5 (a) The market interest rate is 6.32%, the stock price is $55, and the current bond price is $1,124.50. Construct the graph as in class showing the value of the bond. Make sure you identify the straight bond value, the current floor value, the point at which the floor value switches from the straight bond value to the conversion value, and the option value.(b) Now redo (a) for the situation where the market interest rate is 4.77% and the bond price is $1,162.32.