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n hired to value a new 25-year callable-convertible bond. The bond has a 5% coupon, payable semi-annually, and its face value is $ n price is $50 and the stock currently sells for $35. Calculate the minimum value of the bond. Comparable nonconvertible bonds ar 8%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your example, an answer of $1,000.50 should be entered as 1000.50.)

n hired to value a new 25-year callable-convertible bond. The bond has a 5% coupon, payable semi-annually, and its face value is $ n price is $50 and the stock currently sells for $35. Calculate the minimum value of the bond. Comparable nonconvertible bonds ar 8%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your example, an answer of $1,000.50 should be entered as 1000.50.)

Essentials Of Investments
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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You have been hired to value a new 25-year callable-convertible bond. The bond has a 5% coupon, payable semi-annually, and its face value is $1,000. The conversion price is $50 and the stock currently sells for $35. Calculate the minimum value of the bond. Comparable nonconvertible bonds are priced to yield 8%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your response. For example, an answer of $1,000.50 should be entered as 1000.50.) Numeric Response
Transcribed Image Text:You have been hired to value a new 25-year callable-convertible bond. The bond has a 5% coupon, payable semi-annually, and its face value is $1,000. The conversion price is $50 and the stock currently sells for $35. Calculate the minimum value of the bond. Comparable nonconvertible bonds are priced to yield 8%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your response. For example, an answer of $1,000.50 should be entered as 1000.50.) Numeric Response
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