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Maple Aircraft has issued a 4 % convertible subordinated debenture due 3 years from now. The conversion price is $ 4 7 and the debenture
Maple Aircraft has issued a convertible subordinated debenture due years from now. The conversion price is $ and the debenture is callable at of face value. The market price of the convertible is of face value, and the price of the common is $ Assume that the value of the bond in the absence of a conversion feature is about of face value.
In the absence of the conversion feature, what is the current yield and yield to maturity?
What is the conversion ratio of the debenture?
If the conversion ratio were what would be the conversion price?
What is the conversion value?
At what stock price is the conversion value equal to the bond value?
Can the market price be less than the conversion value?
How much is the convertible holder paying for the option to buy one share of common stock?
By how much does the common have to rise after three years to justify conversion?
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