Cheung's convertible bonds pay a 6.24% annual coupon, but if Cheung had issued straight-debt bonds (no conversion), it would have had to pay 10.40% annual interest. Based on the information available, complete the table: Cheung's common stock currently sells for $31 per share. Would an investor want to convert the bonds now? No Yes Suppose analysts expect Cheung to pay a dividend of $3.00 per share at the end of the year and for the dividend to grow at a constant rate of 5% per year. What is the expected conversion value five years from now? $1, 188.89 $792.59 $1, 975.33 $594.44 Convertible securities are also used to deal with situations that lead to agency conflict. Consider this situation: Suppose some of Cheung's investors think that the company might be using the "bait-and-switch" strategy. For this reason, they invested in the company's convertible securities. If the value of the company turns to be than expected, then bondholders will and benefit from the investment. Therefore, convertible bonds can offer interest rates and help minimize agency costs. Cheung's convertible bonds pay a 6.24% annual coupon, but if Cheung had issued straight-debt bonds (no conversion), it would have had to pay 10.40% annual interest. Based on the information available, complete the table: Cheung's common stock currently sells for $31 per share. Would an investor want to convert the bonds now? No Yes Suppose analysts expect Cheung to pay a dividend of $3.00 per share at the end of the year and for the dividend to grow at a constant rate of 5% per year. What is the expected conversion value five years from now? $1, 188.89 $792.59 $1, 975.33 $594.44 Convertible securities are also used to deal with situations that lead to agency conflict. Consider this situation: Suppose some of Cheung's investors think that the company might be using the "bait-and-switch" strategy. For this reason, they invested in the company's convertible securities. If the value of the company turns to be than expected, then bondholders will and benefit from the investment. Therefore, convertible bonds can offer interest rates and help minimize agency costs