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Convertible bond price-cineplex

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Reference no: EM132722579

Cineplex convertible bond maturing in 2025 pays 5.75% annual coupon, can convert anytime into 90 common shares of Cineplex Inc. The recent price quote of the bond is 101. Cineplex shares are currently trading at $7 per share and do not pay dividends.

Assume that you are the investment advisor and the current time is the end of 2020

Questions:

-What is the convertible bond price?

-What is the conversion value of the bond?

-What is the conversion price of the stock (conversion parity)?

-What is the conversion premium, in dollars and as a percentage?

-If the couple buys this bond, can they get the conversion premium paid back before maturity based on the current stock price and why?

-If comparably rated nonconvertible bonds sell to yield 3%, what is the investment value of the convertible?

Reference no: EM132722579

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