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6. A firm issues 6% convertible loan notes that are redeemable in 4 years' time at a per- note nominal value of 100. Each loan

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6. A firm issues 6% convertible loan notes that are redeemable in 4 years' time at a per- note nominal value of 100. Each loan note could alternatively be converted into 10 ordinary shares in 4 years' time. The cost of debt is 8%. Assuming that the share price in 4 years' time is 5 per share, what is the current market value of a convertible loan note? a. 93.38 b. 90.44 c. 96.00 d. 100.00

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