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 is currently priced in the market at $35 a share.
a. What is the bonds conversion price?
b. What is its conversion ratio?
c. What is the conversion value of this issue?
d. What is its conversion parity?
e. What is the conversion premium, in dollars and as a percentage?
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Fixed Income Securities Tools For Todays Markets
Authors: Bruce Tuckman, Angel Serrat
3rd Edition
0470891696, 978-0470891698
