2.2 Desmond Tutukhile, is evaluating his investment alternatives in Ytel Incorporated by analyzing a Ytel convertible bond and Ytel common equity. The characteristics of the two securities are given in the following Table 2.1: Common Equity Characteristics Par value Coupon (armal payment) Curent market price Straight Bond Value Conversion ratio Conversion option Dividend Expected Market Price in 1 Year Table 2.1 Convertible Bond E1 000 4% E980 E925 25 At any time E35 per share E1,125 E45 per share Required. 2.23 Expected one-year rate of return for the Ytel common equuty (2 Marks) 2.3 One year has passed and Ytel common equity price has increased to E51.00 per share. Also, over the year, the yield to maturity on Ytel's non-convertible bonds of the same maturity increased, while credit spreads remain unchanged. Name two components of the convertible bond's value. Indicate whether the value of each component should decrease, stay the same, or increase in response to the 23.1 Increase in Ytel's common equity price (2 Marks) 23.2 Increase in bond yield. (2 Marks)