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You have been hired to value a new 30-year callable, convertible bond. The bond has a coupon rate of 2.7 percent, payable semiannually, and its
You have been hired to value a new 30-year callable, convertible bond. The bond has a coupon rate of 2.7 percent, payable semiannually, and its face value is $1,000. The conversion price is $54, and the stock currently sells for $38. a. What is the minimum value of the bond? Comparable nonconvertible bonds are priced to yield 4.9 percent.
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