new 30

-

year callable, convertible bond has a 3.2 percent coupon, payable annually, and its

face value is $1,000. The conversion price is $58 and the stock currently sells for $39.

Comparable nonconv

ertible bonds are priced to yield 4.9 percent. What is the minimum value

of the bond?

[PVIFA

4.9%,30

= 15.5492]

A.

$1408.08

B.

$1,000.00

C.

$735.66

D.

$672.41

E.

$596.36