Question
The following datarefers to a company's issue of convertible bonds: Maturity: 10 years Stock price: $30.00 Par value: $1,000.00 Conversion price: $35.00 Annual coupon: 5.00%
The following datarefers to a company's issue of convertible bonds:
Maturity: 10 years
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 bond's conversion ratio?
B) What is the bond's conversion value?
C) What is the bond's straight-debt value?
D) Based on your answers to the three preceding questions, what is the minimum price (or "floor" price) at which the bonds should sell?
Please choose from the below:
- A.$1079.95
- B.$664.50
- C.$925.67
- D.$1000.00
- E.$857.10
- F.$798.70
- G.$999.95
- H.$698.05
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Investments Analysis and Management
Authors: Charles P. Jones
12th edition
978-1118475904, 1118475909, 1118363299, 978-1118363294
