Question 40 (1.5 points) A company issued convertible bonds with a face value of $ 1,000. Each bond is exchangeable at any time for 25 common shares of the company. It offers a semi-annual coupon rate of 4% and coupons are paid semi-annually. The required rate of return is 5% per semester. The bond has a 10-year maturity. The common stock sells for $ 38. Calculate the conversion premium for this bond.

Options 5.26315% 5% 8% 6.17365% 4.17412%