Find the conversion premium in dollars and in percent

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Xilinx, a company in the semiconductor industry, has a $1,000 convertible bond with a conversion ratio of 32.076 and a coupon of 3.125%. The bond is currently priced at $751. Xilinx stock trades at $19.25, and pays an annual dividend of $0.56.

a. Find the conversion value of this bond. Explain what this means.

b. Find the conversion premium in dollars and in percent.

c. Find the payback period. Explain what this means in your own words without quoting the definition of payback period. In addition, state whether or not this is considered to be an acceptable payback period.

 

Reference no: EM13259978

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