What is the conversion value of this issue

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Reference no: EM131620217

A certain 7% annual coupon rate convertible bond (maturing in 20 years) is convertible at the holder's option into 23 shares of common stock. The bond is currently trading at $820. The stock (which pays 75¢ a share in annualdividends) is currently priced in the market at $37.66 a share.

a. What is the bond's conversion price?

b. What is its conversion ratio?

c. What is the conversion value of this issue? What is its conversion parity?

d. What is the conversion premium, in dollars and as a percentage?

e. What is the bond's payback period?

f. If comparably rated, nonconvertible bonds sell to yield 9%, what is the investment value of the convertible?

Reference no: EM131620217

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