Inputs:
Straight bond yield				7%
Current stock price				$22.00
Expected growth rate in stock price				7%
Dividend yield				4%
Par value (and issue price) of convertible bond				$1,000.00
Coupon rate on convertible bond				6.00%
Maturity of convertible bond (years)				20
Conversion ratio				32
Call protection period (years)				5
Call price when call protection ends				$1,090.00
Call price decline per year after protection period				$6.00
Policy for call: Call when conversion value exceeds this percent over bond's par value.				25%

c. Assume that the convertible bondholders require a 9% rate of return. If the coupon rate remains unchanged, then what conversion ratio will give a bond price of $1000? Expected return required by convertible bondholders 9% Hint: Use Goal seek to set the difference between the convertible bondholders' current return and the target return to zero by changing the input cell for the conversion ratio. Current difference between bondholders' current expected return and target return (multiplied by 1000) = Conversion ratio (given original convertible coupon rate) that produces the required yield (Note: after using Goal Seek, cut and paste the conversion ratio into the yellow cell): c. Assume that the convertible bondholders require a 9% rate of return. If the coupon rate remains unchanged, then what conversion ratio will give a bond price of $1000? Expected return required by convertible bondholders 9% Hint: Use Goal seek to set the difference between the convertible bondholders' current return and the target return to zero by changing the input cell for the conversion ratio. Current difference between bondholders' current expected return and target return (multiplied by 1000) = Conversion ratio (given original convertible coupon rate) that produces the required yield (Note: after using Goal Seek, cut and paste the conversion ratio into the yellow cell)