Question

A certain 6​% annual coupon rate convertible bond​ (maturing in 20​ years) is convertible at the​...

A certain 6​% annual coupon rate convertible bond​ (maturing in 20​ years) is convertible at the​ holder's option into 20 shares of common stock. The bond is currently trading at $800. The stock​ (which pays 85​¢ a share in annual​ dividends) is currently priced in the market at $35.68 a share.

a. What is the​ bond's conversion​ price? (Round to the nearest​ cent.)

b. What is its conversion​ ratio? (Round to the nearest​ integer.)

c. What is the conversion value of this​ issue? What is its conversion​ parity? (Round to the nearest​ cent.)

d. What is the conversion​ premium, in dollars and as a​ percentage? (Round to the nearest​ cent.) (Round to two decimal​ places.)

e. What is the​ bond's payback​ period? (Round to two decimal​ places.)

f. If comparably​ rated, nonconvertible bonds sell to yield 8%, what is the investment value of the​ convertible? (Round to the nearest​ cent.)

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A certain 7?% annual coupon rate convertible bond? (maturing in 20? years) is convertible at the?...
A certain 7?% annual coupon rate convertible bond? (maturing in 20? years) is convertible at the? holder's option into 23 shares of common stock. The bond is currently trading at ?$820. The stock? (which pays 92?¢ a share in annual? dividends) is currently priced in the market at $35.87a share. a.??What is the? bond's conversion? price? b.??What is its conversion? ratio? c.??What is the conversion value of this? issue? What is its conversion? parity? d.??What is the conversion? premium, in...
A certain 6​% annual coupon rate convertible bond​ (maturing in 20​ years) is convertible at the​...
A certain 6​% annual coupon rate convertible bond​ (maturing in 20​ years) is convertible at the​ holder's option into 20 shares of common stock. The bond is currently trading at ​$800. The stock​ (which pays 72​¢ a share in annual​ dividends) is currently priced in the market at ​$36.34 a share. a. What is the​ bond's conversion​ price? b. What is its conversion​ ratio? c. What is the conversion value of this​ issue? What is its conversion​ parity? d. What...
A certain 6​% annual coupon rate convertible bond​ (maturing in 20​ years) is convertible at the​...
A certain 6​% annual coupon rate convertible bond​ (maturing in 20​ years) is convertible at the​ holder's option into 20 shares of common stock. The bond is currently trading at ​$800. The stock​ (which pays 65​¢ a share in annual​ dividends) is currently priced in the market at ​$30.91 a share. a. What is the​ bond's conversion​ price? b. What is its conversion​ ratio? c. What is the conversion value of this​ issue? What is its conversion​ parity? d. What...
A certain 7 ?% annual coupon rate convertible bond? (maturing in 20? years) is convertible at...
A certain 7 ?% annual coupon rate convertible bond? (maturing in 20? years) is convertible at the? holder's option into 23 shares of common stock. The bond is currently trading at ?$820 . The stock? (which pays 69 ?¢ a share in annual? dividends) is currently priced in the market at ?$36.65 a share. a.What is the? bond's conversion? price? b.What is its conversion? ratio? c.What is the conversion value of this? issue? What is its conversion? parity? d.What is...
A certain 5​% annual coupon rate convertible bond​ (maturing in 20​ years) is convertible at the​...
A certain 5​% annual coupon rate convertible bond​ (maturing in 20​ years) is convertible at the​ holder's option into 17 shares of common stock. The bond is currently trading at ​$790. The stock​ (which pays 77​¢ a share in annual​ dividends) is currently priced in the market at ​$33.71 a share. a. What is the​ bond's conversion​ price? b. What is its conversion​ ratio? c. What is the conversion value of this​ issue? What is its conversion​ parity? d. What...
A convertible bond has a coupon of 7 percent, paid semiannually, and will mature in 20...
A convertible bond has a coupon of 7 percent, paid semiannually, and will mature in 20 years. If the bond were not convertible, it would be priced to yield 6 percent. The conversion ratio on the bond is 15 and the stock is currently selling for $54 per share. What is the minimum value of this bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Minimum value:
A convertible bond is selling for $800. It has 10 years to maturity, a $1000 face...
A convertible bond is selling for $800. It has 10 years to maturity, a $1000 face value, and a 10% coupon paid semi-annually. Similar nonconvertible bonds are priced to yield 14%. The conversion price is $50 per share. The stock currently sells for $31.375 per share. Determine the bond's option value.
Problem 18-6 Convertible Bonds (LO3, CFA5) A convertible bond has a coupon of 6 percent, paid...
Problem 18-6 Convertible Bonds (LO3, CFA5) A convertible bond has a coupon of 6 percent, paid semiannually, and will mature in 18 years. If the bond were not convertible, it would be priced to yield 5 percent. The conversion ratio on the bond is 30 and the stock is currently selling for $39 per share. What is the minimum value of this bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
You have been hired to value a new 20-year callable, convertible bond. The bond has a...
You have been hired to value a new 20-year callable, convertible bond. The bond has a coupon rate of 2.8 percent, payable semiannually, and its face value is $1,000. The conversion price is $59, and the stock currently sells for $46. a. What is the minimum value of the bond? Comparable nonconvertible bonds are priced to yield 3 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the conversion premium...
You have been hired to value a new 20-year callable, convertible bond. The bond has a...
You have been hired to value a new 20-year callable, convertible bond. The bond has a coupon rate of 8.4 percent, payable semiannually, and its face value is $1,000. The conversion price is $67, and the stock currently sells for $54. a. What is the minimum value of the bond? Comparable nonconvertible bonds are priced to yield 9 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the conversion premium...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT