Question
You have been hired to value a new 10-year callable, convertible bond. The bond has a 4 percent coupon, payable semi-annually, and its face value
| You have been hired to value a new 10-year callable, convertible bond. The bond has a 4 percent coupon, payable semi-annually, and its face value is $1,000. The conversion price is $75, and the stock currently sells for $65. |
| What is the minimum value of the bond? Comparable nonconvertible bonds are priced to yield 10 percent. |
| What is the conversion premium for this bond? |
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Intermediate Financial Management
Authors: Eugene F Brigham, Phillip R Daves
9th Edition
032431986X, 9780324319866
