A company has a convertible bond outstanding with a conversion price of $50 and maturity in 10 years. The company's share price is $24.25. This convertible bond pond traded in the market with face value of $1,000, annual coupon rate of 9%, and required return of 12%. What is the floor value of this convertible bond? $2,575 $830.49 $928.34 $24.25 O $485
A company has a convertible bond outstanding with a conversion price of $50 and maturity in 10 years. The company's share price is $24.25. This convertible bond pond traded in the market with face value of $1,000, annual coupon rate of 9%, and required return of 12%. What is the floor value of this convertible bond? $2,575 $830.49 $928.34 $24.25 O $485
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 9P
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![A company has a convertible bond outstanding with a conversion price of $50 and maturity in 10 years. The company's share price is $24.25. This convertible bond is comparable to a 10-year coupon
bond traded in the market with face value of $1,000, annual coupon rate of 9%, and required return of 12%. What is the floor value of this convertible bond?
O $2,575
O $830.49
O $928.34
O $24.25
O $485](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F009cd706-8566-4c1d-ab16-36df90e53061%2F402a5dfd-fcd8-44b8-8d9f-eb2476bf5b6d%2Fjtpp3gc_processed.png&w=3840&q=75)
Transcribed Image Text:A company has a convertible bond outstanding with a conversion price of $50 and maturity in 10 years. The company's share price is $24.25. This convertible bond is comparable to a 10-year coupon
bond traded in the market with face value of $1,000, annual coupon rate of 9%, and required return of 12%. What is the floor value of this convertible bond?
O $2,575
O $830.49
O $928.34
O $24.25
O $485
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