Question 8 (1 point) Today is the morning of Jan 2, Year 5. XYZ Inc has exchange-listed convertible bonds outstanding. The coupon rate is 8.47% with the coupon payable every six months. The yield is 7.21% compounded semi-annually. The maturity is on July 2, Year 14 (i.e. in 9.5 years), and the coupon is payable every January 2 and July 2. Each $1,000 face value convertible bond converts into 58 XYZ shares. The XYZ shares are currently trading at $19.04 per share. The delta of long-dated, at-the-money XYZ call options is 0.8 and is not expected to change with short-term changes in prices of the underlying. Comparable plain-vanilla (non-convertible) bonds with the same maturity, coupon, and credit risk are yielding 7.63%. What is the revised expected price of one convertible bond today if the plain-vanilla bond yields drop by 25 basis points and the share price rises to $21.30 per share? $1,117.32 $1,147.52 $1,177.72 $1,207.92 $1,238.12 Question 8 (1 point) Today is the morning of Jan 2, Year 5. XYZ Inc has exchange-listed convertible bonds outstanding. The coupon rate is 8.47% with the coupon payable every six months. The yield is 7.21% compounded semi-annually. The maturity is on July 2, Year 14 (i.e. in 9.5 years), and the coupon is payable every January 2 and July 2. Each $1,000 face value convertible bond converts into 58 XYZ shares. The XYZ shares are currently trading at $19.04 per share. The delta of long-dated, at-the-money XYZ call options is 0.8 and is not expected to change with short-term changes in prices of the underlying. Comparable plain-vanilla (non-convertible) bonds with the same maturity, coupon, and credit risk are yielding 7.63%. What is the revised expected price of one convertible bond today if the plain-vanilla bond yields drop by 25 basis points and the share price rises to $21.30 per share? $1,117.32 $1,147.52 $1,177.72 $1,207.92 $1,238.12