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an ABC company approached you as they need raise additional capital. They proposed two different investments for you to invest $760, first you can buy
an ABC company approached you as they need raise additional capital. They proposed two different investments for you to invest $760, first you can buy their common stock for $40 per share (pays no dividends) or (buy a convertible bond) the convertible bond's price is $760 (1,000 par value) and has a conversion ratio of 19. the convertible bond pays a 5% annual interest. you feel the price of the stock will be at $50 at the end of the year. which investment should you purchase and what is the holding period return?
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