Question
A certain 6% annual coupon rate convertible bond ($1,000 par value, maturing in 20 years) is convertible at the holders option into 20 shares of
A certain 6% annual coupon rate convertible bond ($1,000 par value, maturing in 20 years) is convertible at the holders option into 20 shares of common stock. The bond is currently trading at $800. The stock (which pays 75 a share in annual dividends) is currently priced in the market at $35 a share.
What is the bonds conversion price?
What is its conversion ratio?
What is the conversion value of this issue? What is its conversion parity?
What is the conversion premium, in dollars and as a percentage?
What is the bonds payback period?
If comparably rated nonconvertible bonds sell to yield 8%, what is the investment value of the convertible?
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Big Tech In Finance
Authors: Igor Pejic
1st Edition
139860898X, 978-1398608986
