A 10-year convertible bond with a coupon rate 6% can be converted into 22 shares of common stock. This bond has a yield of 7%. Its current stock price is $40 per share and it is expected to grow at 2% per year. Approximately when will the bondholders on this convertible bond will convert this bond into 22 shares of common stocks? Please support your answers with calculations
A 10-year convertible bond with a coupon rate 6% can be converted into 22 shares of common stock. This bond has a yield of 7%. Its current stock price is $40 per share and it is expected to grow at 2% per year. Approximately when will the bondholders on this convertible bond will convert this bond into 22 shares of common stocks? Please support your answers with calculations
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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Transcribed Image Text:A 10-year convertible bond with a coupon rate 6% can be converted into 22 shares of common stock. This bond has a yield of 7%. Its
current stock price is $40 per share and it is expected to grow at 2% per year. Approximately when will the bondholders on this
convertible bond will convert this bond into 22 shares of common stocks? Please support your answers with calculations
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