The following facts apply to a convertible bond making semiannual payments: Conversion price Coupon rate Par value Yield on nonconvertible debentures of same quality Maturity Market price of stock $33/share 8.5% $1,000 11.5% 15 years $29/share

The following facts apply to a convertible bond making semiannual payments: Conversion price Coupon rate Par value Yield on nonconvertible debentures of same quality Maturity Market price of stock $33/share 8.5% $1,000 11.5% 15 years $29/share

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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Question

The following facts apply to a convertible bond making semiannual payments:
Conversion price
Coupon rate
Par value
Yield on nonconvertible debentures
of same quality
Maturity
Market price of stock
$33/share
8.5%
$1,000
11.5%
15 years
$29 /share
What is the minimum price at which the convertible should sell?

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