Question
Consider the following convertible bond issue with 4 years until maturity: Current market price of convertible $960 Annual coupon 7.5% Conversion ratio 30 Par Value
Consider the following convertible bond issue with 4 years until maturity:
Current market price of convertible $960
Annual coupon 7.5%
Conversion ratio 30
Par Value $1,000
Market price of stock $28.50
Annual stock dividend per share $2.15
Assuming a flat yield curve at 10% per annum, compute the following for the convertible bond:
a) Market conversion price
b) Market conversion premium per share
c) Straight value
d)Premium over straight value
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School Finance A Policy Perspective
Authors: Allan Odden, Lawrence Picus
5th Edition
0078110289, 978-0078110283
