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hello, i want answers for all PV7-13 Determining values: Convertible bond Eastern Clock Company has an outstanding issue of convertible bonds with a $1,000 par
hello, i want answers for all
PV7-13 Determining values: Convertible bond Eastern Clock Company has an outstanding issue of convertible bonds with a $1,000 par value. These bonds are convertible into 50 shares of common stock. They have a 10% annual coupon interest rate and a 20-year maturity. The interest rate on a straight bond of similar risk is currently 12%. a. Calculate the straight bond value of the bond. b. Calculate the conversion (or stock) value of the bond when the market price of the common stock is $1$$ $20, $23, $30, and $45 per share. c. For each of the stock prices given in part b, at what price would you expect the bond to sell? Why? d. What is the least you would expect the bond to sell for, regardless of the com- mon stock price behaviorStep by Step Solution
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