Calculate the straight bond value of this bond

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Question - Determining values-Convertible bond - Craig's Cake Company has an outstanding issue of 11-year convertible bonds with a $1,000 par value. These bonds are convertible into 90 shares of common stock. They have a 15% annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 11%.

Required -

a. Calculate the straight bond value of this bond.

b. Calculate the conversion (or stock) value of the band when the market price is $19 per share of common stock.

c. What is the minimum market value of the bond?

Reference no: EM133063996

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