A company issues 2 bonds, a regular bond and convertible bond (same regular bond but has convertibility option). The regular bond has semi-annual 6% coupon $1,000 par, 15 years to maturity and its price is $1,010. The value of the convertible option in percent is 35 basis point. What is the price of the convertible bond to the nearest cents ?

A company issues 2 bonds, a regular bond and convertible bond (same regular bond but has convertibility option). The regular bond has semi-annual 6% coupon $1,000 par, 15 years to maturity and its price is $1,010. The value of the convertible option in percent is 35 basis point. What is the price of the convertible bond to the nearest cents ?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 16P

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