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A 4% annual coupon convertible bond has 14 years to maturity, a $1,000 par value and is priced at $1,620. This bond can be converted
A 4% annual coupon convertible bond has 14 years to maturity, a $1,000 par value and is priced at $1,620. This bond can be converted into 20 shares of common. The common currently sells for $63 per share and pays a $0.20 quarterly dividend per share. Similar bonds that are not callable yield 5.25%.
What is this bond's payback period?
a. 12 years
b. 13 years
c. 14 years
d. 15 years
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