Value of bond based on market price of the common stock

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Reference no: EM13868356

Given the following information concerning a convertible bond:

Principal: $ 1,000      Coupon: 4%                Maturity: 20 years    

Call price: $ 1,030       Conversion price: $ 25                                 

Market Price of common stock $ 19.00   Market Price of Bond $ 1,020.

a) What is the current yield of this bond?

b) What is the value of the bond based on the market price of the common stock?

c) What is the value of the common stock based on the market price of the bond?

Reference no: EM13868356

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