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 What is the current yield of this bond? What is the value of the bond based on the market price of the common stock? What is the value of the bond based on the market priced of the bond? What is the premium in terms of stock that the investor pays when he or she purchases the convertible bond instead of the stock?
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 What is the current yield of this bond? What is the value of the bond based on the market price of the common stock? What is the value of the bond based on the market priced of the bond? What is the premium in terms of stock that the investor pays when he or she purchases the convertible bond instead of the stock?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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(please dont answer in excel im not familiar with it yet, equations I am familiar with and or worded answers)
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
- What is the current yield of this bond?
- What is the
value of the bond based on the market price of the common stock? - What is the value of the bond based on the market priced of the bond?
- What is the premium in terms of stock that the investor pays when he or she purchases the convertible bond instead of the stock?
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