What value would you assign to the bond

Reference no: EM132056729

Problem: Pricing Convertibles

You have been hired to value a new 20-year callable, convertible bond. The bond has a 6.3 percent coupon, payable annually. The conversion price is $105, and the stock currently sells for $47.10. The stock price is expected to grow at 10 percent per year. The bond is callable at $1,200, but, based on prior experience, it won't be called unless the conversion value is $1,300. The required return on this bond is 9 percent.

What value would you assign to this bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Bond value $

Reference no: EM132056729

Questions Cloud

Examine the current issues related to your chosen topic : Describe at least three (3) specific needs of the students in the school district including students with special learning needs.

Ingredient tested with a sample of regular soda : The effect of caffeine as an ingredient tested with a sample of regular soda and another sample with decaffeinated soda. is it Independent samples or Matched pa

Difference in the proportion of homes with dogs : If this sample data is used to test the claim that there is a difference in the proportion of homes with dogs that are burglarized and the proportion of homes

Price of call options and put options prior to expiration : Explain the factors which influence the price of Call Options and Put Options prior to their expiration.

What value would you assign to the bond : You have been hired to value a new 20-year callable, convertible bond. The bond has a 6.3 percent coupon, payable annually. The conversion price is $105.

What was the expected value of a ticket : A lottery offers one $1000 prize, two $500 prizes, and five $100 prizes. One thousand tickets are sold at $3.50 each. What was the expected value of a ticket?

Common cause and special cause variations : What is the difference between common cause and special cause variations?

Bellfont production cost per door stopper for september : Bellfont Company produces door stoppers. Assuming no structural changes, what is Bellfont’s production cost per door stopper for September?

Cardiovascular disease : Obesity is an important determinant of cardiovascular disease because it directly affects several established cardiovascular risk factors

User Account

All Pages