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What is the value of the implicit call option on the bond

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A 12-year maturity convertible bond with a 5% annual coupon on a company with a bond rating of AAA is selling for $1,088. Each bond can be exchanged for 25 shares, and the stock price currently is $40 per share. Other AAA- rated bonds with the same maturity would sell at a yield to maturity of 9%. What is the value of the implicit call option on the bond?

Reference no: EM133003070

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