Summary of the following

1. Convertibles.

2. Forwards.

3. Futures.

4. Call option.

5. Put option.

Case study

Problem number 4,5,8 of handouts.

Problem 4

Straight bonds value calculate the straight bonds value for each of the bonds

Problem 5

\fDetermining values-Convertible bond Craig's Cake Company has an outstanding issue of 15-year convertible bonds with a $1,000 par value. These bonds are convert- ible into 80 shares of common stock. They have a 13% annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 15%. a. Calculate the straight bond valve of this bond. b. Calculate the conversion for stock) value of the bond when the market price is $9, $12, $13, $15, and $20 per share of common stock. c. For each of the common stock prices given in part b, at what price would you expect the bond to sell? Why