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You have purchased a $1,000 par value convertible bond with a 5% coupon. The bond matures in 3 years, requires a return of 8% based
- You have purchased a $1,000 par value convertible bond with a 5% coupon. The bond matures in 3 years, requires a return of 8% based on the risk associated with the bond and is therefore currently priced at $922.69. Presently, the companys common stock is selling for $26 per share. If the bond is convertible into 55 shares of the companys common stock.
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- What is the straight bond value of the bond today?
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- What is the conversion price of the stock?
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- What is the Conversion Value of the bond?
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- Would it be profitable for you to convert your bond into common shares at this time?
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Governing The Modern Corporation Capital Markets Corporate Control And Economic Performance
Authors: Roy C. Smith, Ingo Walter
1st Edition
0195171675,0199924015
