What is the value of the bondholders call option

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Problem: A 10-year maturity convertible bond with a face value of $1,000 and a 6% coupon on a company with a bond rating of Aaa is selling for $1,095. The bond pays interest annually. Other Aaa-rated bonds with the same maturity would sell at a yield to maturity of 7%. What is the value of the bondholders' call option? Please explain your answer.

Reference no: EM132417999

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