Question
Cineplex convertible bond maturing in 2025 pays 5.75% annual coupon, can convert anytime into 90 common shares of Cineplex Inc. The recent price quote of
Cineplex convertible bond maturing in 2025 pays 5.75% annual coupon, can convert anytime into 90 common shares of Cineplex Inc. The recent price quote of the bond is 101. Cineplex shares are currently trading at $7 per share and do not pay dividends.
- If the couple buys this bond, can they get the conversion premium paid back before maturity based on the current stock price and why?
- If comparably rated nonconvertible bonds sell to yield 3%, what is the investment value of the convertible?
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Management Accounting Information for Decision-Making and Strategy Execution
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
6th Edition
137024975, 978-0137024971
