Question
ISSUE: Global Corp. ISSUE DATE: June 15, 1990 Maturity date: June 2000 Interest: 4.5% annually Issue size: $250,000,00 Issue Price: $1,000 par value Conversion ratio:
ISSUE: Global Corp. ISSUE DATE: June 15, 1990 Maturity date: June 2000 Interest: 4.5% annually Issue size: $250,000,00 Issue Price: $1,000 par value Conversion ratio: 33.45% Conversion price on June 15, 2025: $1,327 Share Price on June 15, 2025: $87
a. Calculate and discuss the conversion value.
b. Calculate and discuss the market premium.
c. Calculate and discuss the risk return.
d. Calculate and discuss the conversion value.
e. If on June 15, 2025 the convertible bond is available at $1,115, is there an arbitrage opportunity and if so, what is it and why?
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Finance Applications and Theory
Authors: Marcia Cornett, Troy Adair
3rd edition
1259252221, 007786168X, 9781259252228, 978-0077861681
