What is the conversion value of the bond

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You own a bond maturing in 10 years that has a $100 face value and a 6% coupon rate payable semi-annually. The yield to maturity on similar bonds is 5% compounded semi-annually. The bond is also convertible with a conversion ratio of 4.5. The stock is currently selling for $25.

a. What would be the value of the convertible bond if it were merely a straight bond without any conversion option?

b. What is the conversion value of the bond?

c. What is the minimum price of the convertible bond?

Reference no: EM131537040

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