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    Julian2020's Avatar
    Julian2020 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Nov 16, 2015, 12:03 PM
    Given the following information concerning a convertible bond:
    Given the following information concerning a convertible bond:

    Principal $1000
    Coupon 5%
    Maturity 15 years
    Call price $1050
    Conversion Price $37 (i.e. 27 shares)
    Market Price of the
    Common stock $32
    Market Price of the
    Bond $1040


    1. What is the current yield of this bond?
    2. What is the value of the bond based on the market price of the common stock?
    3. What is the value of the common stock based on the market price of the bond?
    4. What is the premium in terms of stock that the investor pays when he or she purchases the convertible bond instead of the stock?
    5. Nonconvertible bonds are selling with a yield to maturity of 7%. If this bond lacked the conversion feature, what would the approximate price of the bond be?
    Curlyben's Avatar
    Curlyben Posts: 18,514, Reputation: 1860
    BossMan
    		  
    #2

    Nov 16, 2015, 12:38 PM
    What do YOU think ?
    While we're happy to HELP we wont do all the work for you.
    Show us what you have done and where you are having problems..
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