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Suppose that the current market interest rate is at 5% per annum in semi-annually compounding rate. A convertible bond issued by Study Inc has coupon
Suppose that the current market interest rate is at 5% per annum in semi-annually compounding rate. A convertible bond issued by Study Inc has coupon rate of 5% per annum., a face value of 100, and time-to-maturity of 10 years. The coupon payment will pay to bondholders every 6 months. Bondholders may convert each unit of the bond into 100 shares of Study Inc shares at any time during the life of the bond. If the current stock price of Study Inc is trading at 10 per share, estimate the convexity of this convertible bond.
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