Subject :investment analysis

Sakura Berhad has the following convertible bond outstanding.

Total amount issued= RM 5 million Coupon 5%= annual basis Maturity =10 years Conversion ratio= 20 shares Current market share price= RM4.50 No. Of share outstanding =3 million Corporate Tax= 25% It is determined that other competitive convertible bonds in the market are giving an average yield of 6% . REQUIRED: Calculate the below :

a) Conversion price b) Conversion value c) Number of additional shares that would have to be issued , if the bonds are fully converted. d) The straight bond value of the convertible e) The stock value of the convertible f) The minimum price that the bond should trade in the market g) Explain FIVE (5) factor affecting the price of a share option. Provide examples.