In: Finance
Maple Aircraft has issued a convertible bond at 4.75% interest due 2020. The market price of the convertible is 91% of face value (face value is $1,000). The current price of the common stock is $41.50 and the conversion price is $47. Assume that the value of the bond in the absence of a conversion feature is about 65% of face value. How much is the convertible holder paying for the option to buy one share of common stock?
A. $12.22
B. $10.79
C. $5.5
D. $13.12
Please Show the steps on how to get the answer.