The computer game developer Future Games (FG) is in need of new capital. Thus, the company has issued a convertible consisting of a 10-year zero coupon that can be converted into shares in the company. The nominal amount is SEK 10,000 and the conversion price is SEK 110.

The convertible is currently valued at SEK 7,700. Other zero coupons with the same term and risk are priced so that they give an annual return of 3%. Today's share price for FG is SEK 81.

a) Calculate the number of shares you can convert to.

b) Also calculate what you pay for the opportunity to become an owner (ie the option element).

c) Assume that you must choose to convert or not already today (if you choose not to convert, in this case you only have the bond part left). Are you ready to convert today (report and explain with calculations)?