Consider the convertible bond by ABC Company: Par value = $1,000 Coupon rate = 8.5% Market price of convertible bond = $900 Conversion ratio = 30 Estimated straight value of bond = $700 Assume that the price of ABC Company's common stock is $25 and that the dividend per share is $1 per annum Calculate each of the following: a) Conversion value b) Market conversion price c) Conversion premium per share d) Conversion premium ratio e) Premium over straight value
Consider the convertible bond by ABC Company: Par value = $1,000 Coupon rate = 8.5% Market price of convertible bond = $900 Conversion ratio = 30 Estimated straight value of bond = $700 Assume that the price of ABC Company's common stock is $25 and that the dividend per share is $1 per annum Calculate each of the following: a) Conversion value b) Market conversion price c) Conversion premium per share d) Conversion premium ratio e) Premium over straight value
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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