. You own a convertible bond that pays annually, has a 4% yield, 7.5% coupon rate, and matures in 10 years. The conversion ratio is 20. The stock price is $43. What is your gain or loss if you convert? What is the minimum stock price to convert this bond? Answer: loss of 423.88 / convert if stock price is greater than 64.19
. You own a convertible bond that pays annually, has a 4% yield, 7.5% coupon rate, and matures in 10 years. The conversion ratio is 20. The stock price is $43. What is your gain or loss if you convert? What is the minimum stock price to convert this bond? Answer: loss of 423.88 / convert if stock price is greater than 64.19
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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1. You own a convertible bond that pays annually, has a 4% yield, 7.5% coupon rate, and matures in 10 years. The conversion ratio is 20. The stock price is $43. What is your gain or loss if you convert? What is the minimum stock price to convert this bond?
Answer: loss of 423.88 / convert if stock price is greater than 64.19
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