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 $12.50.The bond has a 6 percent coupon,pays interest semi-annually,and matures in 12 years.Similar bonds are yielding 9 percent.The current price of the stock is $13.40 per share.What is the straight bond value?

• A)$782.57
• B)$781.82
• C)$827.74
• D)$832.09
• E)$843.47

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