What Is the Minimum Value of the Call Option on a Convertible

question 58

Multiple Choice

What is the minimum value of the call option on a convertible bond with a conversion ratio of 30 if the bond offers a 9% coupon, has 10 years until maturity and market interest rates are 9% for comparable bonds? The stock is currently priced at 35.

• A)$0
• B)$5
• C)$50
• D)$65

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