Question
You have been hired to value a new 25-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 25-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 $60, and the stock currently sells for $45.
What is the minimum value of the bond? Comparable nonconvertible bonds are priced to yield 5 percent.
What is the conversion premium for this bond?
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Business Analysis And Valuation Using Financial Statements Text And Cases
Authors: Krishna G. Palepu, Paul M. Healy, Victor L Bernard
3rd Edition
0324118945, 9780324118940
