Question 6 Dubai Properties pic has in issue 5% convertible debt with 8 years to redemption (at par or by converting £1,000 to 9 shares). The bond can only be converted at maturity. The bonds are trading at a yield of 6.7%. Dubai Properties' shares are currently trading at £83.20 and are expected to increase in value by 6% a year over the next 8 years. The bond has just paid a coupon and there is no accrued interest to account for. The lowest value the bond can have today today is: Question 6 options: £897.30 £975.20 £902.1 £1012.46 £1109.32
Question 6 Dubai Properties pic has in issue 5% convertible debt with 8 years to redemption (at par or by converting £1,000 to 9 shares). The bond can only be converted at maturity. The bonds are trading at a yield of 6.7%. Dubai Properties' shares are currently trading at £83.20 and are expected to increase in value by 6% a year over the next 8 years. The bond has just paid a coupon and there is no accrued interest to account for. The lowest value the bond can have today today is: Question 6 options: £897.30 £975.20 £902.1 £1012.46 £1109.32
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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Transcribed Image Text:Question 6
Dubai Properties pic has in issue 5% convertible debt with 8 years to redemption (at par or by converting £1,000 to 9
shares). The bond can only be converted at maturity. The bonds are trading at a yield of 6.7%. Dubai Properties' shares are
currently trading at £83.20 and are expected to increase in value by 6% a year over the next 8 years. The bond has just
paid a coupon and there is no accrued interest to account for. The lowest value the bond can have today today is:
Question 6 options:
£897.30
£975.20
£902.1
£1012.46
£1109.32
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