FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:You have been hired to value a new 30-year callable,
convertible bond. The bond has a 7 percent coupon,
payable annually, and its face value is $1,000. The
conversion price is $60, and the stock currently sells
for $50. Comparable non-convertible bonds are priced
to yield 9 percent. What is the conversion premium
for this bond?
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