What is the bonds conversion ratio and value

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Reference no: EM13919702

The following data apply to Saunders Corporation’s convertible bonds.

Maturity in years: 10 Current stock price: $30.00

Par value: $1,000.00 Conversion price: $35.00

Annual coupon: 5.00% Straight-debt yield: 8.00%

a. What is the bond’s conversion ratio?

b. What is the bond’s conversion value?

c. What is the bond’s straight-debt value?

d. Based on your answers to the three preceding questions, what is the minimum price (or “floor” price) at which the Saunders’ bonds should sell?

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Reference no: EM13919702

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