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 A. What is the current yield of this bond? B. What is the value of the bond based on the market price of the common stock? C. What is the value of the bond based on the market priced of the bond?

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
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please dont answer in excel, i dont understand that yet, just equations or worded answers please, thanks)

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
  1. A. What is the current yield of this bond?
  2. B. What is the value of the bond based on the market price of the common stock?
  3. C. What is the value of the bond based on the market priced of the bond?
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