Question
Assume you just paid $1,280 for a convertible bond that carries a 9.84% coupon and has 15 years to maturity. The bond can be converted
Assume you just paid $1,280 for a convertible bond that carries a 9.84% coupon and has 15 years to maturity. The bond can be converted into 24 shares of stock, which are now trading at $50 a share. Find the bond investment value of this issue, given that comparable nonconvertible bonds are currently selling to yield 13.44%.
The bond investment value of this issue is $ ?????
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
12th Edition
978-0030243998, 30243998, 324422695, 978-0324422696
