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A convertible bond has a coupon of 7 percent, paid semiannually, and will mature in 1 8 years. If the bond were not convertible, it

A convertible bond has a coupon of

7

percent, paid semiannually, and will mature in

18

years. If the bond were not convertible, it would be priced to yield

6

percent. The conversion ratio on the bond is

20

and the stock is currently selling for $

40

per share. What is the minimum value of this bond?

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