Price a convertible bond with par=$1000, conversion ratio=20, annual coupon rate=8.8%, and 2 years to maturity. The bond is callable at 104% par in year 1, and convertible from year 1 through maturity. Assume annual compounding, a constant one-year discount rate of 10%, and the following binomial model for stock price evolution. Round your answer to 2 decimal places. t = 0t = 1t = 2 74.32 59.68 51.06 51.06 42.53 31.66

Price a convertible bond with par=$1000, conversion ratio=20, annual coupon rate=8.8%, and 2 years to maturity. The bond is callable at 104% par in year 1, and convertible from year 1 through maturity. Assume annual compounding, a constant one-year discount rate of 10%, and the following binomial model for stock price evolution. Round your answer to 2 decimal places. t = 0t = 1t = 2 74.32 59.68 51.06 51.06 42.53 31.66

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 12P: Bond Yields and Rates of Return A 10-year, 12% semiannual coupon bond with a par value of 1,000 may...

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