Question
The following data apply to Saunders Corporations convertible bonds. Maturity in years: 10 Current stock price: $30.00 Par value: $1,000.00 Conversion price: $35.00 Annual coupon:
The following data apply to Saunders Corporations convertible bonds.
Maturity in years: 10 Current stock price: $30.00
Par value: $1,000.00 Conversion price: $35.00
Annual coupon: 5.00% Straight-debt yield: 8.00%
a. What is the bonds conversion ratio?
b. What is the bonds conversion value?
c. What is the bonds straight-debt value?
d. Based on your answers to the three preceding questions, what is the minimum price (or floor price) at which the Saunders bonds should sell?
Show work please
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Equity Valuation Risk And Investment A Practitioners Roadmap
Authors: Peter C. Stimes
1st Edition
0470226404, 9780470226407
