Four years ago, Microsoft issued 10-year semi-annual bonds that pay an annual rate of 3.5% and face value of $1,000. They are convertible at any time into 4 shares of common stock. What is the market price of the bonds if the yield to maturity is 2.5% and the common shares are trading at $245 per share?
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K3.
Four years ago, Microsoft issued 10-year semi-annual bonds that pay an annual rate of 3.5% and face value of $1,000. They are convertible at any time into 4 shares of common stock. What is the market price of the bonds if the yield to maturity is 2.5% and the common shares are trading at $245 per share?
The correct answer should be $1,055.40
Can you show me the steps please and do not use excel. Please use equations
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