Question
The following datarefers to a company's issue of convertible bonds: Maturity: 10 years 10 Stock price: $30.00 Par value: $1,000.00 Conversion price: $35.00 Annual coupon:
The following datarefers to a company's issue of convertible bonds:
Maturity: 10 years 10
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?
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Personal Finance
Authors: Jeff Madura, Hardeep Singh Gill
3rd Canadian Edition
978-0133035575, 133035573, 978-0133970524, 133970523, 978-0134040042
