Manpower Electric Company has $5$ percent convertible bonds outstanding. Each bond has a $$1,000$ par value. The conversion ratio is $25,$ the stock price $$38,$ and the bonds mature in $16$ years. Use Appendix B and Appendix D as an approximate answer, but calculate your final answer using the formula and financial calculator methods.

What is the conversion value of the bond?

Note: Do not round intermediate calculations and round your answer to the nearest whole dollar.

Assume after one year that the common stock price falls to $$20\mathrm{.}50.$ What is the conversion value of the bond?

Note: Do not round intermediate calculations and round your answer to the nearest whole dollar.

Also assume that after one year interest rates go up to $10$ percent on similar bonds. There are $15$ years left to maturity. What is the pure value of the bond? Use semiannual analysis.

Note: Do not round intermediate calculations. Round your final answer to $2$ decimal places.

Will the conversion value of the bond $($part b$)$ or the pure value of the bond $($part c$)$ have a stronger influence on its price in the market?

multiple choice

Conversion value of the bond

Pure value of the bond

If the bond trades in the market at its pure bond value, what would be the conversion premium $($stated as a percentage of the conversion value$)?$

Note: Do not round intermediate calculations. Input your answer as a percent rounded to $2$ decimal places.