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ABC Inc. has an outstanding convertible bond trading at $1,045. The bond can be converted into 45 shares of companys stock currently trading at $24/share.

ABC Inc. has an outstanding convertible bond trading at $1,045. The bond can be converted into 45 shares of companys stock currently trading at $24/share. The bond has 8 years of remaining maturity and a 6% coupon paid annually. ABCs regular bond (i.e., the debt without a conversion feature) is currently trading to yield 5%. How much is the arbitrage profit arising from mispricing?

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