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mantparn mantparn
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7 years ago
Zheng Sen's Pen Company has an outstanding issue of convertible bonds with a $1,000 par value. These bonds are convertible into 50 shares of common stock. They have a 10 percent coupon and a 10-year maturity. The interest rate on a straight bond of similar risk is 8 percent.
(a)   Calculate the straight bond value of the bond.
(b)   Calculate the conversion value of the bond when the market price of the stock is $30/share.
(c)   What is the least you would expect the bond to sell for at a market price of common stock of $18/share?
Textbook 
Principles of Managerial Finance

Principles of Managerial Finance


Edition: 14th
Authors:
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alovelyalovely
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7 years ago
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mantparn Author
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#2
7 years ago
Thanks again for helping me in my management class!
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