Question
You bought an XYZ Corp $1,000, 5% convertible bond for $1,000. It has a conversion feature allowing you to convert the bond into 50
You bought an XYZ Corp $1,000, 5% convertible bond for $1,000. It has a conversion feature allowing you to convert the bond into 50 shares of XYZ common stock. a. b. At what stock price would converting the bonds into stock result in a break even trade? One year from now, the stock price is $25. Convert the bond, sell the stock at $25, add in the bond interest, and calculate the total return in dollars and as a yield of the original $1,000 investment.
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Get StartedRecommended Textbook for
Intermediate Financial Management
Authors: Eugene F. Brigham, Phillip R. Daves
11th edition
978-1111530266
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