3. A firm has just issued a 30-year callable, convertible bond with a coupon rate of 10 percent. The bond makes semi-annual coupon payments. The par value of the bond is $1,000. The bond has a conversion price of $150. The company's stock is selling for $120 per share. The owner of the bond will be forced to convert if the bond's conversion value is ever greater than or equal to $1,500. The required return on an otherwise identical nonconvertible bond is 8 percent. a) What is the value of the straight bond (i.e., value of the bond without the call options)? b) If the stock price were to grow by 6 percent per year forever, how long would it take for the bond's conversion value to exceed $1,500? c) Assume that the stock price has grown at 6% a year as expected and the bond is converted when the conversion value is 1,500. What value would you assign to this bond? 3. A firm has just issued a 30-year callable, convertible bond with a coupon rate of 10 percent. The bond makes semi-annual coupon payments. The par value of the bond is $1,000. The bond has a conversion price of $150. The company's stock is selling for $120 per share. The owner of the bond will be forced to convert if the bond's conversion value is ever greater than or equal to $1,500. The required return on an otherwise identical nonconvertible bond is 8 percent. a) What is the value of the straight bond (i.e., value of the bond without the call options)? b) If the stock price were to grow by 6 percent per year forever, how long would it take for the bond's conversion value to exceed $1,500? c) Assume that the stock price has grown at 6% a year as expected and the bond is converted when the conversion value is 1,500. What value would you assign to this bond