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1) A 10% coupon twenty year maturity AA rated convertible corporate bond is trading for= $1300. Non-convertible bonds of comparable risk are presently yielding 12%. If bond has the conversion ratio of= 25 and stock which is presently trading at= $40 is expected to carry on paying dividends of $1.25 per share, what would toy suggest to your client about attractiveness (or lack thereof) of this convertible bond? Describe the answer by using the three steps of analysis essential for evaluating convertible bond.

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