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A 10-year maturity convertible bond with a 6% coupon on a company with a bond rating of Aaa is selling for $1,050.Each bond can be exchanged for 20 shares,and the stock price currently is $50 per share.Other Aaa-rated bonds with the same maturity would sell at a yield to maturity of 8%.What is the value of the bondholders' call option? Why is the bond selling for more than the value of the shares it can be converted into?
Deviance
Occurs when someone departs from a norm and evokes a negative reaction from others.
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Involves a mild sanction that is imposed during face-to-face interaction, not by the judicial system.
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