Schenkel, Inc., has a $1,000 face value convertible bond issue that is currently selling in the market for $960. Each bond is exchangeable at any time for 19 shares of the company's stock. The convertible bond has a 6.5 percent coupon, payable semiannually. Similar nonconvertible bonds are priced to yield 9 percent. The bond matures in 20 years. Stock in Schenkel sells for $45 per share.

a-1 What is the conversion ratio?

Conversion ratio

19

a-2 What is the conversion price? (Round your answer to 2 decimal places. (e.g., 32.16))

Conversion price $

52.63

a-3

What is the conversion premium? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Conversion premium

16.96

%

b-1 What is the straight bond value? (Round your answer to 2 decimal places. (e.g., 32.16))

Straight bond value $

771.79

b-2 What is the conversion value?

Conversion value $

855

c

What would the stock price have to be for the conversion value and the straight bond value to be equal? (Round your answer to 2 decimal places. (e.g., 32.16))

Stock price $

d

What is the option value of the bond? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Option value $