A convertible bond has the following features: Principal $1,000 Maturity date 25 years Interest $80 (8% Coupon) Call price $1,060 Exercise price $55 a share a.) The bond may be converted into how many shares? b.) If comparable non-convertible debt offered an annual yield of 12% what would be the value of this bond as debt? c.) If the stock were selling for $49.50, what is the value of the bond in terms of stock?
A convertible bond has the following features: Principal $1,000 Maturity date 25 years Interest $80 (8% Coupon) Call price $1,060 Exercise price $55 a share a.) The bond may be converted into how many shares? b.) If comparable non-convertible debt offered an annual yield of 12% what would be the value of this bond as debt? c.) If the stock were selling for $49.50, what is the value of the bond in terms of stock?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 7P: Bond Valuation with Semiannual Payments
Renfro Rentals has issued bonds that have a 10% coupon rate,...
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A convertible bond has the following features:
Principal $1,000
Maturity date 25 years
Interest $80 (8% Coupon)
Call price $1,060
Exercise price $55 a share
a.) The bond may be converted into how many shares?
b.) If comparable non-convertible debt offered an annual yield of 12% what would be the value of this bond as debt?
c.) If the stock were selling for $49.50, what is the
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