Kurt owns a convertible bond that matures in 16 years. The bond has a coupon rate of 6 percent paid semi-annually, a face value of $1,000 and a conversion price of $25. Similar bonds have a current market return of 5.85 percent. The current price of the related stock is $26.50 per share. What is the straight bond value? Multiple Choice A. $1,060.00 B. $1,015.45 C. $972.80 D. $980.78 E. $1,030.00

Kurt owns a convertible bond that matures in 16 years. The bond has a coupon rate of 6 percent paid semi-annually, a face value of $1,000 and a conversion price of $25. Similar bonds have a current market return of 5.85 percent. The current price of the related stock is $26.50 per share. What is the straight bond value? Multiple Choice A. $1,060.00 B. $1,015.45 C. $972.80 D. $980.78 E. $1,030.00

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 17P

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