Convertible bonds consider the following convertible, Ask an Expert

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Convertible Bonds. Consider the following convertible bond:

Par value = $1000

Coupon rate = 6.0%

Market price of convertible bond = $950

Conversion ratio = 30

Estimated value of option-free bond = $750

The current price of the common stock is $30 and the annual dividend is $1.50

Calculate the following:

a) Conversion value

b) Market conversion price

c) Market conversion premium ratio

d) Market value of convertible bond if stock price is $40

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92727520

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