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Conversion bond Craig's Cake Company has and outstanding issue of 15-year convertible bonds with the $1,000 par value. These bonds are convertible in 80 shares of common stock. They've a 13% annual coupon interest rate, whereas the interest rate upon strait bonds of similar risk is 16%.

a) Find out the strait bond value of this bound.

b) Find out the conversion (or stock) value of the bond when the market price is $9, $12, $15, and $20 per share of common stock.

c) For each of the common stock prices given in part b, at what price would you expect the bond to sell?

d) Make a graph of the straight value and conversion

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91145575

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