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A 10-Year Convertible Bond Has a Face Value of $1,000,a

Question 4

Multiple Choice

A 10-year convertible bond has a face value of $1,000,a 9% coupon,and a conversion ratio of 30.The stock is currently priced at $35.If a comparable straight bond would have a yield of 9%,what is the minimum value of the call option provided by the convertible?


A) $0
B) $5
C) $50
D) $65

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