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What is the straight bond value of the convertible bond

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Question - Convertible Bond ValueBrewers Medical Supplies, Inc., recently issued a single zero- coupon convertible bond due 10 years from today. The convertible bond, which is currently trading for $350 in the open market, has a face value of $1,000.00 and can be converted into 25 shares of common stock. Each share of Brewers common stock is currently selling for $11.50, and otherwise identical non-convertible bonds yield 12.00 percent per annum (effective annual yield, but remember we compound semi-annually).

Required -

a. What is the straight bond value of the convertible bond?

b. What is its conversion value?

c. What is its option value?

Reference no: EM132963398

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