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Nuri Cemerlang Corporation has 8% semi annually convertible bond and will mature in another 30 years. The RM18 million bond issue was made 10
Nuri Cemerlang Corporation has 8% semi annually convertible bond and will mature in another 30 years. The RM18 million bond issue was made 10 years ago. The conversion price is RM40 and the share is currently selling for RM30 per share. Other similar bonds in the same industry are yielding 14% to maturity. The par value is RM1,000. Calculate: a) Conversion ratio b) Conversion value c) Conversion premium in RM d) Conversion premium in percentage e) Price of the bond (2 marks) g) Define bond trustee. (2 marks) (2 marks) (2 marks) (6 marks) f) If current market price of the bond is RM 960, calculate the bond's current yield to maturity. (4 marks) (2 marks) h) "A risk - averse investor will not assume risk." Do you agree or disagree with this statement? Explain your reasoning. (5 marks)
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a Conversion ratio The conversion ratio is calculated as the par value of the bond divided by the conversion price Conversion ratio Par value Conversi...Get Instant Access to Expert-Tailored Solutions
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