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A convertable bond is selling for $993. It has 15 years to maturity, a $1000 face value, and pays a 8% coupon interest payments annually.

A convertable bond is selling for $993. It has 15 years to maturity, a $1000 face value, and pays a 8% coupon interest payments annually. Similar straight bonds (non-convertible) are priced to yield 8.5%. The conversion ration is 20. The stock currently sells for $45 per share. Calculate the convertale bond's option value.

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