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Toys R Us has the following convertible bond outstanding: Coupon: 5 percent; Principal: $1,000; Maturity: Conversion Price: $10; Call Price: $1,000 Plus one year's interest.
Toys R Us has the following convertible bond outstanding: Coupon: 5 percent; Principal: $1,000; Maturity: Conversion Price: $10; Call Price: $1,000 Plus one year's interest. 20 years: Comparable nonconvertible bonds yield 8 percent. Toys R Us stock is selling for $15 and pays no dividend a. If the bond were selling for $1,350, what would you do? b. If the bond were selling for $1,523, is there any reason to expect that Toys R Us will currently call the bond? C. If the bond is called and you do not convert, what do you receive? Toys R Us has the following convertible bond outstanding: Coupon: 5 percent; Principal: $1,000; Maturity: Conversion Price: $10; Call Price: $1,000 Plus one year's interest. 20 years: Comparable nonconvertible bonds yield 8 percent. Toys R Us stock is selling for $15 and pays no dividend a. If the bond were selling for $1,350, what would you do? b. If the bond were selling for $1,523, is there any reason to expect that Toys R Us will currently call the bond? C. If the bond is called and you do not convert, what do you receive
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