What is the conversion price of these bonds

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Question - Delta Solutions issue a 10 year convertible bond with a 9% coupon paid annually. These bonds convert into common shares at a rate of 40 per $1000 of debt. Straight bonds of similar risk yield 8%. The stock price is currently 40% less than the conversion price, but the stock is expected to growth at 10 per cent annually into the foreseeable future. The bond is callable at $1200 but will not be called until their price is 125%of the conversion value.

What is the conversion price of these bonds (rounded)?

What is the current price of the common shares?

What is the overall return on the bonds (rounded)?

Reference no: EM132604139

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