(Answered) Problem - given the following information concerning a

Accounting

Problem - 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

a) What is the current yield of this bond?

b) What is the value of the bond based on the market price of the common stock?

c) What is the value of the common stock based on the market price of the bond?

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