A $1,000 face value convertible bond has a conversion ratio of 35 and is about to mature. Ignoring any transaction costs, what price must the stock surpass in order for you to convert? The required price per share will be $ (Round to the nearest cent.)
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- A convertible bond can be converted into 1 share of stock. The bond is zero-coupon, i.e., it pays no interest, but matures to a value of $100 in two periods. The stock price is currently $100. In each period the stock can increase in each period by a factor of 1.4, or fall by a factor of 0.8. Each period the stock pays a dividend of 5%, at which point it can be converted. The risk-free rate is 10% and time to maturity is 2-years. Find the price at which the convertible bond can be issuedConsider a convertible bond as follows: par value = $1,000, coupon rate = 8.00%, market price of convertible bond = $1,100, conversion ratio = 18, straight value of bond = $600, yield to maturity of straight bond = 10%, current price of common stock = $45, dividend per share = $3.00/year. A. What is the favorable income differential per bond (not per share)? B. At what stock price, the realized return from investing in the convertible bond becomes zero? In other words, what is the break-even stock price?A convertible bond has a par value of $1,000 and a conversion price of $40. The stockcurrently trades for $30 a share. What are the bond’s conversion ratio and conversionvalue at t =0?
- A $1,000 face value bond has a conversion ratio of 40. You estimate the transaction costs of conversion to be 2.8% of the face value of the bond. What price must the stock reach in order for you to convert?A convertible bond has a par value of $1,000 and a conversion priceof $25. The stock currently trades for $22 a share. What are thebond’s conversion ratio and conversion value at t= 0? (40, $880)Matthews Technology has a $1,000 par value, 20 year convertible bond outstanding with a 10% coupon rate that can be converted into 25 shares of common stock. The common stock is currently selling for $34.00 a share. The convertible bond is selling for $30 more than the conversion value. A competitive, 20 year nonconvertible bond of the same risk class has a 12% annual coupon rate. What is the number of common shares to which the convertible bond can be converted to (Conversion ratio)? Round to the nearest share. Compute the conversion price? Round to 2 decimal places. Compute the conversion value? Round to 2 decimal places. Compute the conversion premium? Round to 2 decimal places. Compute the current selling price of the convertible bond? Round to 2 decimal places. Compute the pure bond value? Round to 2 decimal places. If the common share price goes down to $31.50 and the conversion premium goes up…
- The following data apply to Saunders Corporation's convertible bonds: Maturity: 10 Stock Price: $30.00 Par value: $1,000.00 Conversion price: $35.00 Annual coupon: 5.00% Straight-debt yield: 8.00% What is the bond's straight-debt value? Based on your answers to the three preceding questions, what is the minimum price (or "floor" price) at which the Saunders' bonds should sell? Please solve the problem by using algebra and formulas instead of excel.(Please answer in an equation rather than excel, i dont know excel yet) Given the following information concerning a convertible bond: Principle: $1,000 Coupons: 5 percent Maturity: 15 years Call Price: $1,050 Conversion price: $37 (i.e., 27 shares) Market Price of the Bond: $1040 Common stock $30 D. What is the premium in terms of stock that the investor pays when he or she purchases the convertible bond instead of the stock? E. Nonconvertible bonds are selling with a yield to maturity of 7 percent If this bond lacked the conversion feature, what would the approximate price of the bond be? F. What is the premium in terms of debt that the investor pays when he or she purchases the convertible bond instead of a nonconvertible bond?Please dont answer in excel i dont understand that yet. Given the following information concerning a convertible bond: Principle: $1,000 Coupons: 5 percent Maturity: 15 years Call Price: $1,050 Conversion price: $37 (i.e., 27 shares) Market Price of the Bond: $1040 Common stock $30 D. What is the premium in terms of stock that the investor pays when he or she purchases the convertible bond instead of the stock? E. Nonconvertible bonds are selling with a yield to maturity of 7 percent If this bond lacked the conversion feature, what would the approximate price of the bond be? F. What is the premium in terms of debt that the investor pays when he or she purchases the convertible bond instead of a nonconvertible bond?
- A convertible bond is selling for $800. It has 10 years to maturity, a $1000 face value, and a 10% coupon paid semi-annually. The conversion price, specified at the time the convertible bond is issued, is $50 per share [in other words, if one bond is converted, the number of shares obtained in return equals the face value of the bond divided by this conversion price]. Non-convertible bonds issued by the same firm with the same face value, term to maturity and coupon are priced to yield an effective semi-annual return of 7.2%. The stock currently sells for $31.375 per share. a) What is the value of the convertible bond considered as a straight bond? b) If the bond is converted to shares, how many shares are equivalent to the convertible bond given its face value? What is the value of that share portfolio? c) Calculate the convertible bond’s option value.A convertible bond is selling for $800. It has 10 years to maturity, a $1000 face value, and a 10% coupon paid semi-annually. The conversion price, specified at the time the convertible bond is issued, is $50 per share [in other words, if one bond is converted, the number of shares obtained in return equals the face value of the bond divided by this conversion price]. Non-convertible bonds issued by the same firm with the same face value, term to maturity and coupon are priced to yield an effective semi-annual return of 7.2%. The stock currently sells for $31.375 per share. a) What is the value of the convertible bond considered as a straight bond? b) If the bond is converted to shares, how many shares are equivalent to the convertible bond given its face value? What is the value of that share portfolio?Calculate the market conversion price for a convertible bond with par value of $4000, coupon rate of 5%, market price of $4000, a conversion ratio of 16, and current stock price of $202. 1. Assuming, the issuing company pays an annual dividend of $12 per share, what is the favorable income differential (yield advantage) per share for this bond? 2. Calculate the premium payback period for this bond.
