Calculate stock price above which conversion will make sense

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Reference no: EM1395947

Q. A convertible bond has a coupon rate of 5.25%, a maturity of June 17, 2017, also a market price of $775.00. The underlying price of the common stock is $28.00, the annual dividend is $1.20 also the conversion ratio is 20.83 shares. Calculate the conversion premium for this bond. Calculate the stock price above which conversion will make sense, assuming the bond price remains unchanged. Calculate the stock price which will result in a conversion value equal to the bond's par value.

Reference no: EM1395947

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