Multiple Choice
A convertible bond is selling for $993.It has 15 years to maturity, $1,000 face value, and pays 8 percent coupon interest payments annually.Similar straight bonds (nonconvertible) are priced to yield 8.5 percent.The conversion ratio is 20.The stock is currently selling for $45.Calculate the convertible bond's option value.
A) $34.52
B) $93
C) $7
D) $58.48
Correct Answer:
Verified
Correct Answer:
Verified
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