Question
A company issued a 5-year convertible bond with coupon rate of 6.5%. The issue of this bond also gives the right to the holders of
- A company issued a 5-year convertible bond with coupon rate of 6.5%. The issue of this bond also gives the right to the holders of bonds to convert each unit of bond into 25 shares. The current market share price of the company is 368p. The face value of the bond is £100 and the current market price of this convertible bond is £112.
Define a convertible bond and discuss its features of coupon and redemption date.
Draw a diagram to show the cashflows of this convertible bond.
Calculate conversion value of the bond.
Calculate conversion premium of the bond.
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Convertible Bond A convertible bond is a type of hybrid security that combines features of both debt ...
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Financial Accounting an introduction to concepts, methods and uses
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
13th Edition
978-0538776080, 324651147, 538776080, 9780324651140, 978-0324789003
