Multiple Choice
Suppose you are evaluating a bond that can be exchanged for shares of the issuing company's stock at a conversion price of $5 per share. The bond has a $50 annual coupon, five years to maturity, and straight debt of the same risk is priced to yield 8%. The current share price for the issuing firm is $4.50. What is the minimum value for which the bond should sell?
A) $848.37
B) $880.22
C) $900.00
D) $921.12
E) $1,000.00
Correct Answer:
Verified
Correct Answer:
Verified
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