Question
Given the following information concerning a convertible bond: Principal: $ 1,000 Coupon: 4% Maturity: 20 years Call price: $ 1,030 Conversion price: $ 25 Market
Given the following information concerning a convertible bond:
Principal: $ 1,000 Coupon: 4% Maturity: 20 years
Call price: $ 1,030 Conversion price: $ 25
Market Price of common stock $ 19.00 Market Price of Bond $ 1,020.
a) What is the current yield of this bond?
b) What is the value of the bond based on the market price of the common stock?
c) What is the value of the common stock based on the market price of the bond?
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Risk Management And Financial Institutions
Authors: John C Hull
6th Edition
1119932483, 9781119932482
