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Vernon Glass Company has ( $ 20 ) million in 10 percent, ( $ 1,000 ) par value convertible bonds outstanding. The conversion ratio is
Vernon Glass Company has \\( \\$ 20 \\) million in 10 percent, \\( \\$ 1,000 \\) par value convertible bonds outstanding. The conversion ratio is 50 , the stock price is \\( \\$ 20 \\), and the bond matures in 10 years. The bonds are currently selling at a conversion premium of \\( \\$ 45 \\) over their conversion value. If the price of the common stock rises to \\( \\$ 26 \\) on this date next year, what would your rate of return be if you bought a convertible bond today and sold it in one year? Assume on this date next year, the conversion premium has shrunk from \\( \\$ 45 \\) to \\( \\$ 10 \\). (Hint: Calculate rate of return as (Future bond price - Current bond price + Interest earnings) / Current bond price)) (Do not round intermediate calculations. Input your answer as a percent rounded to \\( \\mathbf{2} \\) decimal places.)
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