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Better beta Inc. has a convertible bond issue currently selling in the market for $840. Each bond is exchangeable for 50 shares of Better Beta

Better beta Inc. has a convertible bond issue currently selling in the market for $840. Each bond is exchangeable for 50 shares of Better Beta common stock.

The convertible bond has an 8 percent coupon. Similar non-convertible bonds are priced to yield 12 percent. The bond matures in eight years. Stock in Better Beta Sells for $16 per share.

Required:

(SHOW ALL CALCULATIONS)

a) What is the conversation ratio, and the conversion price?

b) What is the minimum price that the bond will sell for?

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