A $1,000 3% convertible and callable corporate bond with exactly 10 years to maturity is currently trading to yield -0.3% (negative yield). Currently, the market value the bond exceeds its conversion value by $7 The issuer announces the bond will be calle at a call price of 130 and simultaneously the market value of the issuer's common stock docroaco by 10% Cind th e marlkot valu e of th

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A $1,000 3% convertible and callable
corporate bond with exactly 10 years to
maturity is currently trading to yield -0.3%
(negative yield). Currently, the market value of
the bond exceeds its conversion value by $70.
The issuer announces the bond will be called
at a call price of 130 and simultaneously the
market value of the issuer's common stock
decreases by 1%. Find the market value of the
bond following the announcement. Express
your answer in dollars and cents (not as a %
of par), but omit the $ sign
Transcribed Image Text:A $1,000 3% convertible and callable corporate bond with exactly 10 years to maturity is currently trading to yield -0.3% (negative yield). Currently, the market value of the bond exceeds its conversion value by $70. The issuer announces the bond will be called at a call price of 130 and simultaneously the market value of the issuer's common stock decreases by 1%. Find the market value of the bond following the announcement. Express your answer in dollars and cents (not as a % of par), but omit the $ sign
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