Business 123 Introduction to InvestmentsMay I please have the solution for the following exercise?Thank you, A convertible bond has a conversion ratio of 15 and a par value of $1,000. If the stock is currently sellingfor $82, what is the conversion value? (Hint: The answer is a whole number.)

Like all form of bonds the convertible bond also has a conversion value — which is the value of the…

Answered: A convertible bond has a conversion…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A convertible bond has a par value of $1,000 and a conversion priceof $25. The stock currently trades for $22 a share. What are thebond’s conversion ratio and conversion value at t= 0? (40, $880)
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A$1,000 face value convertible bond has a conversion ratio of 31 and is about to mature. Ignoring any transaction costs, what price must the stock surpass in order for you to convert? The required price per share will be $ (Round to the nearest cent.)
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Consider a convertible bond as follows: par value = $1,000, coupon rate = 8.00%, market price of convertible bond = $1,100, conversion ratio = 18, straight value of bond = $600, yield to maturity of straight bond = 10%, current price of common stock = $45, dividend per share = $3.00/year. A. What is the favorable income differential per bond (not per share)? B. At what stock price, the realized return from investing in the convertible bond becomes zero? In other words, what is the break-even stock price?
(Please answer in an equation rather than excel, i dont know excel yet) Given the following information concerning a convertible bond: Principle: $1,000 Coupons: 5 percent Maturity: 15 years Call Price: $1,050 Conversion price: $37 (i.e., 27 shares) Market Price of the Bond: $1040 Common stock $30 D. What is the premium in terms of stock that the investor pays when he or she purchases the convertible bond instead of the stock? E. Nonconvertible bonds are selling with a yield to maturity of 7 percent If this bond lacked the conversion feature, what would the approximate price of the bond be? F. What is the premium in terms of debt that the investor pays when he or she purchases the convertible bond instead of a nonconvertible bond?
Breuer Investment's convertible bonds have a $1,000 par value and a conversion price of $45 a share. What is the convertible issue's conversion ratio? Round your answer to two decimal places.
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A bond with par value $1000 pays an annual coupon of $39. What is its coupon rate? Enter your answer in % to 2 decimal places, for example, if you think the answer is 6.75231%, enter 6.75 Answer:
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A convertible bond has a conversion ratio of 15 and a par value of $1,000. If the stock is currently selling for $82, what is the conversion value? (Hint: The answer is a whole number.)