What is the convertible bonds conversion premium

Assignment Help Financial Management
Reference no: EM13913122

A $1000 par value convertible bond has a conversion price of $50. It is currently selling for $1,120 despite the fact that the bond’s coupon rate and the market rate are equal. The common stock obtained upon conversion is selling for $54 per share. What is the convertible bond’s conversion premium?

Reference no: EM13913122

Questions Cloud

Calculate the tension in the rope : A massless rope is stretched horizontally between two supports that are 3.0 m apart. When an object of weight 3200 N is hung at the center of the rope, the rope is observed to sag by 50 cm. Calculate the tension in the rope.
Compute the equivalent units of production-material costs : Process costing Problem Spectre Chemicals produces Zaloff in a two department process. Information on the two departments for March and April, 2011 are as follows: March 2011: Compute the Equivalent Units of Production, Material costs, and Conversion..
Simple interest : this amount at his credit union and earn 4 percent simple interest. Or he can open an account at Compass Bank and earn 3.65 percent interest, compounded annually.
Based on current dividend yields and expected capital gains : Based on current dividend yields and expected capital gains, the expected rates of return on portfolios A and B are 13.0% and 15.0%, respectively. If you currently hold a market index portfolio, what would be the alpha for Portfolios A and B?
What is the convertible bonds conversion premium : A $1000 par value convertible bond has a conversion price of $50. It is currently selling for $1,120 despite the fact that the bond’s coupon rate and the market rate are equal. The common stock obtained upon conversion is selling for $54 per share. W..
Effective annual risk-free rate of interest : A put option on a stock with a current price of $48 has an exercise price of $50. The price of the corresponding call option is $4.50. According to put-call parity, if the effective annual risk-free rate of interest is 6% and there are four months un..
Types of business organizations : Do some research and find an article that discusses financing with stock. Based on the article, determine what type of business you think stock financing is best and be sure to include the advantages and disadvantage of different types of business or..
Length of the tunnel : Assume that a tunnel is dug across the earth(radius R) passing through its center. Find the time a particle takes to cover the length of the tunnel if
Evaluating a proposed capital budgeting project : Suppose Cold Goose Metal Works Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $2,225,000. Cold Goose Metal works Inc.'s weighted average cost of capital is 8%, and project Beta has th..

Reviews

Write a Review

Financial Management Questions & Answers

  Two-phase genetic algorithm model

Write a paper in which, a two-phase genetic algorithm (GA) model is proposed to solve the resource-constrained project scheduling problem. Both time-cost trade-off and resource scheduling are considered in the proposed model.

  What is required return using capital asset pricing model

what is the required return using the capital asset pricing model if a stock's beta is 1.2 and the individual, who expects the market to rise by 11.2%, can earn 4.4% invested in risk -free Treasury bill?

  Calculate the firms earnings per share

Calculate the firms earnings per share (EPS) for each year, recognising that the number of shares issued has remained unchanged since the firm's inception. Comment on the EPS performance in view of your response to question 1a.

  Risk and return risk and return coefficient of

risk and return coefficient of variation ltbrgtbased on the following information calculate the coefficient of

  Provide financial planning advice to the clients

Provide financial planning advice in the case study.

  Position in treasury bond futures contracts

Green Backs Bank wishes to take a position in Treasury bond futures contracts, which currently have a quote of 96-240. Green Backs thinks interest rates will go down over the period of investment. Should the bank go long or short on the futures contr..

  Effects of errors in inventory valuation

Show the effect, if any, of each of the following errors on ending inventory, cost of goods sold, gross profit on sales, and net income by placing the appropriate symbol in each column. In use is the periodic inventory system. Use the following symbo..

  Calculate the present value of the project

Southern California Publishing Company is trying to decide whether to revise its popular textbook, Financial Psychoanalysis Made Simple. The company has estimated that the revision will cost $75,000. Cash flows from increased sales will be $20,300 th..

  The risk-return trade off that investors face on day-to-day

The risk-return trade off that investors face on a day-to-day basis is based on realized rates of return because expected returns involve too much uncertainty.

  What was cost of goods sold for the year

X Company, a manufacturer, reported the following inventory balance for 2012: What was Cost of goods sold for the year?

  Estimate the probability that the exchange rate

An exchange rate is currently 0.8000. The volatility of the exchange rate is quoted as 12% and interest rates in the two countries are the same. Using the lognormal assumption, estimate the probability that the exchange rate

  Cooperative net income to gauge health of cooperative

Describe how you could use the net present value of cooperative net income to gauge the health of a cooperative. How could you use the net present value of owner’s common stock to gauge the health of your cooperative.. Discuss how you could use these..

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!

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