A 10-year convertible bond with a coupon rate 6% can be converted into 20 shares of common stock. This bond has a yield of 7%. Its current stock price is $40 per share and it is expected to grow at 5% per year. Approximately when will the bondholders on this convertible bond will convert this bond into 20 shares of common stocks? Please support your answers with calculatio
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
A 10-year convertible bond with a coupon rate 6% can be converted into 20 shares of common stock. This bond has a yield of 7%. Its current stock price is $40 per share and it is expected to grow at 5% per year. Approximately when will the bondholders on this convertible bond will convert this bond into 20 shares of common stocks? Please support your answers with calculatio
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