Business, 19.08.2021 23:10 lbbeanss

Determining values—Convertible bond Eastern Clock 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% annual coupon interest rate and a 20-year maturity. The interest rate on a straight bond of similar risk is currently 12%. a. Calculate the straight bond value of the bond.
b. Calculate the conversion (or stock) value of the bond when the market price of the common stock is $15, $20, $23, $30, and $45 per share.
c. For each of the stock prices given in part b, at what price would you expect the bond to sell? Why?
d. What is the least you would expect the bond to sell for, regardless of the common stock price behavior?
e. For the stock price of $15, the price you would expect the bond to sell at is $ (Round to the nearest cent.)
For the stock price of $20, the price you would expect the bond to sell at is $ (Round to the nearest dollar.)
For the stock price of $23, the price you would expect the bond to sell at is $ . (Round to the nearest dollar.)
For the stock price of $30, the price you would expect the bond to sell at is $ (Round to the nearest dollar.)
For the stock price of $45, the price you would expect the bond to sell at is $ . (Round to the nearest dollar.)

Answers: 2

Show answers

Another question on Business

Business, 21.06.2019 20:20

On february 3, smart company sold merchandise in the amount of $5,800 to truman company, with credit terms of 2/10, n/30. the cost of the items sold is $4,000. smart uses the perpetual inventory system and the gross method. truman pays the invoice on february 8, and takes the appropriate discount. the journal entry that smart makes on february 8 is:

Answers: 3

Answer

Business, 22.06.2019 07:30

When selecting a savings account, you should look at the following factors except annual percentage yield (apy) fees minimum balance interest thresholds taxes paid on the interest variable interest rates

Answers: 1

Answer

Business, 22.06.2019 09:50

Beck company had the following accounts and balances at the end of the year. what is net income or net loss for the year? cash $ 74 comma 000 accounts payable $12,000 common stock $21,000 dividends $12,000 operating expenses $ 13 comma 000 accounts receivable $ 49 comma 000 inventory $ 47 comma 000 longminusterm notes payable $33,000 revenues $ 91 comma 000 salaries payable $ 30 comma 000

Answers: 1

Answer

Business, 22.06.2019 21:00

Describe what fixed costs and marginal costs mean to a company.

Answers: 1

Answer

You know the right answer?

Determining values—Convertible bond Eastern Clock Company has an outstanding issue of convertible bo...

Questions