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Bahamas Lite & Gas has the following convertible bond outstanding: Coupon: 5% Principal: $1,000 Maturity: 20 years Conversion price: $10 Call price: $1,000+ one year's
Bahamas Lite \& Gas has the following convertible bond outstanding: Coupon: 5% Principal: $1,000 Maturity: 20 years Conversion price: $10 Call price: $1,000+ one year's interest Comparable nonconvertible bonds yield 8 percent. Bahamas Lite \& Gas' stock is selling for $15 and pays no dividend. a) If the bond were selling for $1,350, what would you do? b) If the bond were selling for $1,523, is there any reason to expect that Bahamas Lite \& Gas will currently call the bond? c) If the bond is called and you do not convert, what do you receive
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