Convertible bond-what is minimum value of this bond

Assignment Help Financial Management
Reference no: EM131087729

A convertible bond has a 9 percent coupon, paid semiannually, and will mature in 12 years. If the bond were not convertible, it would be priced to yield 8 percent. The conversion ratio on the bond is 25 and the stock is currently selling for $43 per share. What is the minimum value of this bond? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Reference no: EM131087729

Questions Cloud

What is the call premium of the bond : You own a bond with a 6.8 percent coupon rate and a yield to call of 7.7 percent. The bond currently sells for $1,094. If the bond is callable in five years, what is the call premium of the bond?
Municipal bond with coupon rate-what is the price of bond : A municipal bond with a coupon rate of 3.9 percent has a yield to maturity of 4.9 percent. Assume a face value of $5,000. If the bond has 5 years to maturity, what is the price of the bond?
Bond ratings and prices-change in the percentage terms : A corporate bond with a 6.900 percent coupon has thirteen years left to maturity. It has had a credit rating of BB and a yield to maturity of 8.5 percent. What will be the change in the bond’s price in dollars? What will be the change in the percenta..
Create portfolio equally as risky as the market : You want to create a portfolio equally as risky as the market, and you have $500,000 to invest. Information about the possible investments is given below: Asset Investment Beta Stock A $ 130,000 .75 Stock B $ 150,000 1.20 Stock C 1.35 Risk-free asset..
Convertible bond-what is minimum value of this bond : A convertible bond has a 9 percent coupon, paid semiannually, and will mature in 12 years. If the bond were not convertible, it would be priced to yield 8 percent. The conversion ratio on the bond is 25 and the stock is currently selling for $43 per ..
Statements is typically correct for going-concern firm : Which one of the following statements is typically correct for a going-concern firm?
Economy probability of state of economy rate of return : Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Recession .35 −.09 Boom .65 .21 Required: Calculate the expected return.
Preparing to make monthly payments : You are preparing to make monthly payments of $75, beginning at the end of this month, into an account that pays 6 percent interest compounded monthly. How many payments will you have made when your account balance reaches $10,000?
What was price of the company stock stock split : Albany Motors recently completed a 3-for-1 stock split. Prior to the split, the company had 10 million shares outstanding and its stock price was $150 per share. After the split, the total market value of the company's stock equaled $1.5 billion. Wha..

Reviews

Write a Review

Financial Management Questions & Answers

  What if project is judged to have lower-than-average risk

You have been asked to evaluate the proposed acquisition of a new clinical laboratory tesgt system. The system's price is $50,000, and it will cost another $10,000 for transportation and installation. What if the project is judged to have lower-than-..

  What line items reflected the largest-percentage increases

What line items reflected the largest-percentage increases

  Compute the cost of each capital component

Calculate the cost of each capital component, after-tax cost of debt, cost of preferred, and cost of equity with the CAPM method.

  Calculate the return and risk of a two asset portfolio

Calculate the return and risk of a two asset portfolio. Asset 1 has an annualized expected real return of 5.5% and a weight of 35% in the portfolio. Asset 2 has an annualized expected real rate of return of 2.0% and a weight of 40% in the portfolio.

  Generate no internal equity for the foreseeable future

Southern Alliance Company needs to raise $55 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. What is the true initial cost figure Southern should u..

  Calculate component weights of capital

To finance the purchase, GBH will sell 20-year bonds with a $1000 par value paying 7.9 percent per year (paid semi annually) at the market price of $928. Preferred stock paying a $2.55 dividend can be sold for $34.76. Common stock for GBH is currentl..

  Depreciated on straight line basis and has no salvage value

One year ago your company purchased a machine for $110,000. You have learned that the new, much better machine is available for $150,000. In will be depreciated on a straight line basis and has no salvage value. Your company’s tax rate is 45% and the..

  Cause the basis risk in hedge using futures

Which of the following conditions does not cause the basis risk in hedge using futures?

  Effective financing rate from borrowing dollars

Assume that the U.S. interest rate is 7% while the interest rate on the euro is 11%. If euros are borrowed by a U.S. firm, they would have to _______ against the dollar by about _______ in order to have the same effective financing rate (break-even) ..

  Dividends are expected to grow at a rate

Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 5 percent thereafter. If the required return is 12 percent, and the company just paid a di..

  How much should he set aside today for the purchase

Stephen plans to purchase a car 5 years from now. The car will cost $55,339 at that time. Assume that Stephen can earn 5.16 percent (compounded monthly) on his money. How much should he set aside today for the purchase?

  What is the weight of the preferred stock

The Auto Group has 1,000 bonds outstanding that are selling for $840 each. The company also has 8,300 shares of preferred stock at a market price of $65 each. The common stock is priced at $60 a share and there are 29,000 shares outstanding. What is ..

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