Question
You have been hired to value a new 15-year callable, convertible bond. The bond has a 8 percent coupon, payable semi-annually, and its face value
You have been hired to value a new 15-year callable, convertible bond. The bond has a 8 percent coupon, payable semi-annually, and its face value is $1,000. The conversion price is $60, and the stock currently sells for $40.
What is the minimum value of the bond?
Comparable nonconvertible bonds are priced to yield 14 percent. What is the conversion premium for this bond?
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Financial Markets And Institutions
Authors: Stanley Eakins Frederic Mishkin
9th Global Edition
1292215003, 978-1292215006
