Issue convertible bonds instead of regular bonds

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In March 2016, NuVasive, a medical device company, raised $634 million of 2.25% convertible senior notes due 2021. The company’s stock price was $45.15 at the time.

The conversion rate is 16.7158 shares per $1000 bond. Calculate the conversion price in dollars and the premium as a percentage. Then discuss reasons that explain the size of the premium. Also explain why NuVasive decided to issue convertible bonds instead of regular bonds.

Reference no: EM131917879

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