ABC Inc. just issued a convertible bond due in 10 years and the bond has an 8 percent coupon paid semi-annually. The conversion ratio is 25 shares. The interest rate for straight debt is 10%. The current share price is $28 per share. Each convertible bond is trading at $900 in the market.

1. What is the straight bond value?

2. What is the conversion value?

3. What is the option value of the bond?

4. If the company ABC performs poorly, your convertible option has chance to be exercised? Why?