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4. Your boss asks you to value a new 30-year convertible bond. The bond' s coupon rate -3.2% and is paid semi-annually. Face value of
4. Your boss asks you to value a new 30-year convertible bond. The bond' s coupon rate -3.2% and is paid semi-annually. Face value of the bond = $1,000. The conversion price is $58 and the stock sells for $39. a. What is the minimum value of the bond assuming the yield to maturity of a comparable straight (non convertible) bond is 4.9%? b. What is the conversion premium? c. Assume you were holding the convertible bond and the stock price rose to above $58/share. Would you convert the bond into the stock or hold onto the bond
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