Question I: Relative Value Hedge Funds A convertible bond is issued by the David S. Pumpkin Corporation at par with a conversion ratio of 20. The face value of the bond is $1,000 a. Calculate the conversion price of the bond. Now assume that the bond has a face value of $100, a coupon rate of 8%, and a conversion ratio of 10. Common stock of the David S. Pumpkin Corporation is trading at $23/share b. Calculate the conversion value of the bond Calculate the market value of: c. A short position in a five year zero coupon bond that would form a duration neutral hedge with a $1 million long position in a bond with a duration of 3