Question
Convertible Bonds (1 point) Consider the following convertible bond: Par value = $1000 Coupon rate = 6.0% Market price of convertible bond = $950 Conversion
Convertible Bonds (1 point) Consider the following convertible bond:
Par value = $1000
Coupon rate = 6.0%
Market price of convertible bond = $950
Conversion ratio = 30
Estimated value of option-free bond = $750
The current price of the common stock is $30 and the annual dividend is $1.50
Calculate the following:
a) Conversion value
b) Market conversion price
c) Market conversion premium ratio
d) Market value of convertible bond if stock price is $40
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Financial Informatics An Information Based Approach To Asset Pricing
Authors: Dorje C Brody, Lane Palmer Hughston, Andrea Macrina
1st Edition
9811246483, 978-9811246487
