Question
A convertible bond is selling for $800. It has 10 years to maturity, a $1,000 face value, and a 10% coupon paid semi-annually. Similar nonconvertible
A convertible bond is selling for $800. It has 10 years to maturity, a $1,000 face value, and a 10% coupon paid semi-annually. Similar nonconvertible bondsare priced to yield 14%. The conversion price is $50 per share. The stock currently sellsfor $31.375 per share. Determine the bond's option premium.
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Microeconomics
Authors: Glenn Hubbard, Anthony O'Brien
7th Edition
0134737504, 978-0134737508
