Question
A convertible bond has a face value of $1,000 and a conversion price of $22.50. The bond has a 6 percent coupon and pays interest
A convertible bond has a face value of $1,000 and a conversion price of $22.50. The bond has a 6 percent coupon and pays interest semi-annually. The bond matures in six years. Similar bonds are yielding 7 percent. The current price of the stock is $21.24.
1)What is the straight bond value?
2)What is the conversion ratio ?
3)What is the conversion value?
4)What is the minimum value of the bond?
5)What is the conversion premium for this bond?
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Using Microsoft Excel and Access 2016 for Accounting
Authors: Glenn Owen
5th edition
1337109048, 1337109045, 1337342149, 9781337342148 , 978-1337109048
