User Account

All Pages

Determining the conversion ratio

Assignment Help Finance Basics
Reference no: EM131402457

Dylex Corporation, has a $1,000 face value convertible bond issue that is currently selling in the market for $960. Each bond is exchangeable at any time for 25 shares of the company's stock. The convertible bond has a 7 percent coupon, payable semiannually. Similar nonconvertible bonds are priced to yield 9 percent. The bond matures in 10 years. Stock in Dylex Corporation sells for $35 per share.

Note: Please make sure your answers are rounded to 2 decimal places, and that your answer for the conversion premium is in percentage form (For example: 34.56%).

a) What is the conversion ratio? The conversion price? The conversion premium (in percentage form)?

Conversion ratio =

Conversion price =

Conversion premium =

b) What is the straight bond value? The conversion value?

Straight bond value =

Conversion value =

c) In part (b), what would the stock price have to be for the conversion value and the straight bond value to be equal?

Stock price =

d) What is the option value of the bond?

Option value of the bond =

Reference no: EM131402457

Questions Cloud

What does the standard deviation measure : What does the standard deviation measure? Do you think it is a good measure for investors to use? Why?
What assumptions must be made about two sampled populations : To use the t statistic to test for differences between the means of two populations based on independent samples, what assumptions must be made about the two sampled populations? What assumptions must be made about the two samples?
Explain how it makes sense as a christian prayer : Explain how it makes sense as a Christian prayer. Be specific about how the elements of nature that are singled out for praise (sun, moon, stars, wind, fire, earth, etc.) reflect Christian beliefs about the world and God's role in creating the wor..
What are the odds of pharma heal corporation prevailing : Is going to arbitration with the Sustainia government over the seizure of its clinics worthwhile? What are the odds of Pharma Heal Corporation prevailing?
Determining the conversion ratio : Note: Please make sure your answers are rounded to 2 decimal places, and that your answer for the conversion premium is in percentage form (For example: 34.56%). a) What is the conversion ratio? The conversion price? The conversion premium (in perc..
Use stem and leaf display to estimate proportion of ships : Generate a stem-and-leaf display of the data. Identify the stems and leaves of the graph.- Use the stem-and-leaf display to estimate the proportion of ships that have an accepted sanitation standard.
Assignment requirements : From the trial balance and transaction data below, prepare an income statement and balance sheet for the year ended 30th June 2015. Notes to the financial statements are not required.
Firm desired rate of growth : A firm wants a sustainable growth rate of 3.48 percent while maintaining a 34 percent dividend payout ratio and a profit margin of 8 percent. The firm has a capital intensity ratio of 2. What is the debt-equity ratio that is required to achieve t..
How does the military currently punish these offenders : Rape also occurs within our military ranks. How does the military currently punish these offenders? Would it be truthful to say that many of these rape allegations are "swept under the rug"

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd