A Convertible Bond Has a Face Value of $1,000 and a Conversion

question 101

Multiple Choice

A convertible bond has a face value of $1,000 and a conversion price of $25. The bond has a coupon rate of 6.5 percent, pays interest semi-annually, and matures in 13 years. Similar bonds are currently yielding 6.8 percent. The current price of the related stock is $25.40 per share. What is the straight bond value?

• A) $974.38
• B) $981.82
• C) $1,032.50
• D) $1,016.00
• E) $1,000.00

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