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financial economics Tinancial LUI II. Part two: Calculation. 1. A firm's current stock price is 160$. We expect that the firm's price will increase to

image text in transcribed financial economics
Tinancial LUI II. Part two: Calculation. 1. A firm's current stock price is 160$. We expect that the firm's price will increase to 2408 or 2008 at next period. Risk-free interest factor R is 1.2 (interest rate is 20%). There is a convertible zero-coupon bond, with future payoff to be either 220S or one of the firm's share. Please use AOAO (absence of arbitrage opportunity) to calculate the price of the convertible bond. (15 points)

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