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Each of the following two bonds has the face value of $1.000, the coupon rate of 10% per annum, the payments of coupons semi-annual and
Each of the following two bonds has the face value of $1.000, the coupon rate of 10% per annum, the payments of coupons semi-annual and the remaining term-to-maturity of 10 years But these two bonds differ as follows: First bond: Convertible and non-callable, with its annual yield-to-maturity, denoted by k. of 9% Second bond: Non-convertible and non-callable with its k = 9.5%. Find the value of the conversion option. Secondly, keeping everything else the same assume that the second bond is non-convertible but it is callable and the value of the call option to the issue is $10 per bond. Find the price of the second bond with the call option. Each of the following two bonds has the face value of $1.000, the coupon rate of 10% per annum, the payments of coupons semi-annual and the remaining term-to-maturity of 10 years But these two bonds differ as follows: First bond: Convertible and non-callable, with its annual yield-to-maturity, denoted by k. of 9% Second bond: Non-convertible and non-callable with its k = 9.5%. Find the value of the conversion option. Secondly, keeping everything else the same assume that the second bond is non-convertible but it is callable and the value of the call option to the issue is $10 per bond. Find the price of the second bond with the call option
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