Assume that you purchased a $1,000 convertible corporate bond. Also, assume the bond can be converted to 35.714 shares of the firm's stock. What is the dollar value that the stock must reach before investors would consider converting to common stock?
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- Suppose you own a convertible bond that has a conversion ratio equal to 62. Each convertible bond has a face value equal to $1,000. The current market value of the company's common stock is $16, and the bond is selling for $1,042. If you want to liquidate your position today because you need money to pay your rent, should you sell the bond or should you convert the bond into common stock and then sell the stock? Explain your answer. Round your answers to the nearest dollar. Selling the bond would generate $_______ . Converting the bond and selling the common stock would generate $_______ . Thus, it would be better to SELL THE BOND / CONVERT THE BOND INTO COMMON STOCK AND THEN SELL THE STOCKSuppose you own a convertible bond that has a conversion ratio equal to 58. Each convertible bond has a face value equal to $1,000. The current market value of the company's common stock is $17, and the bond is selling for $1,036. If you want to liquidate your position today because you need money to pay your rent, should you sell the bond or should you convert the bond into common stock and then sell the stock? Explain your answer. Round your answers to the nearest dollar. Selling the bond would generate $ . Converting the bond and selling the common stock would generate $ . Thus, it would be better to .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.)
- Need answer pleaseYou bought a convertible bond issued by Zip Corp which has a conversion ratio of 50 common shares for each $1,000 bond. A) At what stock price per share would you make a profit (“in the money”) if you bought the bond at par? B) What would you expect the bond to sell for in the market if Zip Corp’s stock trades at $28.50 per share?Swift Bicycles plans to issue convertible bonds to finance its future growth. Each convertible bond has a face value equal to $1,000 and can be converted into 25 shares of common stock. What is the minimum stock price that would make it beneficial for bondholders to convert their bonds?
- Currently the common stock is selling for $13; the yield on nonconvertible bonds is 10%, and the yield on comparable preferred stocks is 14%. What is the value of the above securities in terms of the common stock? What would be the value of each security if it lacked the conversion feature? Please Give Step by Step Answer Otherwise I give DISLIKES !!You own a convertible corporate bond that has a par value of R1000. You are considering exercising the embedded option, which has a conversion price of 106. If the firm's share price is currently 180.23, what is the conversion value of your bond?Provide your answer in Rands (R), correct to TWO decimal places. However, do not write the sign (R) only write down the value and do not leave any spaces between numbers.A convertible bond can be converted into 1 share of stock. The bond is zero-coupon, i.e., it pays no interest, but matures to a value of $100 in two periods. The stock price is currently $100. In each period the stock can increase in each period by a factor of 1.4, or fall by a factor of 0.8. Each period the stock pays a dividend of 5%, at which point it can be converted. The risk-free rate is 10% and time to maturity is 2-years. Find the price at which the convertible bond can be issued
- Can you provide the valid approach to solving this financial accounting question with suitable standards?What is the answer for M19?Please dont answer in excel i dont understand that 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?
