Convertible bonds outstanding

Assignment Help Financial Management

Reference no: EM132008829

Vernon Glass Company has $10 million in 10 percent convertible bonds outstanding. The conversion ratio is 60, the stock price is $15, and the bond matures in 10 years. The bonds are currently selling at a conversion premium of $65 over their conversion value.

If the price of the common stock rises to $21 on this date next year, what would your rate of return be if you bought a convertible bond today and sold it in one year? Assume on this date next year, the conversion premium has shrunk from $65 to $15. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Reference no: EM132008829

Questions Cloud

What is the first lesson from capital market history : From the point of view of a borrowing corporation, what are credit and repricing risks? What is the first lesson from capital market history?

Sales price at the end of your investment horizon : What is the forecast sales price at the end of your investment horizon?

Find the current yield and yield to maturity of this bond : Find the current yield and the yield to maturity (YTM) of this bond.

What would be the difference in the EUAW of the Device : What would be the difference in the EUAW of the Device A and B over an 8 year project life if interest rate is 6% per year compounded yearly?

Convertible bonds outstanding : Vernon Glass Company has $10 million in 10 percent convertible bonds outstanding.

Primary asset of the financial services holding company : The primary asset of the financial services holding company is ______.

When organizations decide to finance assets : When organizations decide to finance assets, the key is to match meaning current assets with current financing and long-term assets with long-term financing.

Attitude of skepticism bordering on distrust : Why should the analysts maintain an attitude of skepticism bordering on distrust?

Define the swot analysis for target corporation : Develop a Marketing Plan for Target Corporation, Define the SWOT analysis for Target Corporation.

User Account

All Pages