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The following facts apply to a convertible bond making semiannual payments: Conversion price $50/share Coupon rate 7.5% Par value $1,000 Yield on nonconvertible debentures of
| The following facts apply to a convertible bond making semiannual payments: |
| Conversion price | $50/share |
| Coupon rate | 7.5% |
| Par value | $1,000 |
| Yield on nonconvertible debentures of same quality | 10.5% |
| Maturity | 25 years |
| Market price of stock | $47 /share |
| What is the minimum price at which the convertible should sell? |
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Public Finance
Authors: Harvey Rosen
6th International Edition
0071121234, 978-0071121231
