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Suresh Singh CFA is analyzing a convertible bond The characteristics of the bond and the underlying common stock are given in the following exhibit Convertible Bond Characteristics

  1. Suresh Singh, CFA, is analyzing a convertible bond. The characteristics of the bond and the underlying common stock are given in the following exhibit:

 

Convertible Bond Characteristics

Par value $1,000

Annual coupon rate (annual pay) 6.5%

Conversion ratio 22

Market price 105% of par value

Straight value 99% of par value

Underlying Stock Characteristics

Current market price $40 per share

Annual cash dividend $1.20 per share

 

Compute the bond’s: (LO 15-3)

www.mhhe.com/bkm

    1. Conversion value.

    2. Market conversion price.

Jun 16 2020 View more View Less

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