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A company has an issue of convertible bonds with a $1,000 par value. The bonds have...

A company has an issue of convertible bonds with a $1,000 par value. The bonds have a 10% coupon rate, have a 10-year maturity, and are convertible into 100 shared of common stock. The yield to maturity on bonds of similar risk is 11% and the market price of the firm's common stock is currently $9.00. Based on this information: a) What is the conversation value of this bond if it is selling at $970? b) What is it's pure bond value? c) What is its conversion premium?

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jeff jeffy answered 1 year ago
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