PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 24, Problem 21PS
Convertible bonds Zenco Inc. is financed by 3 million shares of common stock and by $5 million face value of 8% convertible debt maturing in 2029. Each bond has a face value of $1,000 and a conversion ratio of 200. What is the value of each convertible bond at maturity if Zenco’s net assets are worth:
- a. $30 million?
- b. $4 million?
- c. $20 million?
- d. $5 million?
Draw a figure similar to Figure 24.4c showing how the value of each convertible bond at maturity varies with the value of Zenco’s net assets.
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Here are data on $1,000 par value bonds issued by Microsoft, GE Capital, and Morgan Stanley Assume you are thinking about buying these bonds Answer the following questions
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Review
Coupon interest rate…
Use the paper copy of the Present Value Tables, provided on Canvas, to answer the following question
Williams Company issued 200 of its B, $1,000, 5-year bonds on January 1, 2023. On that date, the market rate of interest was 12%. The bonds pay interest quarterly How much
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Select one
O a $150,000
Ob $170,308
O C$150,066
d $114129
e $107.973
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1. In June 2021, DMRR Bahrain, a car watch manufacturer issued $1.2 billion in convertible bonds. The bonds have a 1.25 percent coupon rate, mature in 2025
and can be converted into DMRR common stock at a conversion price of $359.87. Each bond has a face value of $1,000 and When DMRR issued its
convertible bonds, its common stock was trading at S252.54 per share.
Answer the following questions and show your workings clearly.
a What is the conversion price?
b. What is the amount of conversion premium?
e How much the owner will receive of DMRR's share in case of conversion.
d. Whether the DMRR's bond was in the money or out of money. Explain your answer.
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Chapter 24 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 24 - Bond terms Use Table 24.1 (but not the text) to...Ch. 24 - Bond terms Look at Table 24.1: a. The AMAT bond...Ch. 24 - Bond terms Select the most appropriate term from...Ch. 24 - Prob. 5PSCh. 24 - Bond terms Bond prices can fall either because of...Ch. 24 - Security and seniority a. As a senior bondholder,...Ch. 24 - Prob. 8PSCh. 24 - Prob. 9PSCh. 24 - Security and seniority a. Residential mortgages...Ch. 24 - Sinking funds For each of the following sinking...
Ch. 24 - Call provisions a. Look at Table 24.1. Suppose...Ch. 24 - Covenants Alpha Corp. is prohibited from issuing...Ch. 24 - Prob. 14PSCh. 24 - Private placements Explain the three principal...Ch. 24 - Convertible bonds True or false? a. Convertible...Ch. 24 - Convertible bonds Maple Aircraft has issued a 4%...Ch. 24 - Convertible bonds The Surplus Value Company had 10...Ch. 24 - Prob. 19PSCh. 24 - Convertible bonds Iota Microsystems 10%...Ch. 24 - Convertible bonds Zenco Inc. is financed by 3...Ch. 24 - Prob. 22PSCh. 24 - Prob. 23PSCh. 24 - Bank loans, commercial paper, and medium-term...Ch. 24 - Prob. 25PSCh. 24 - Tax benefits Dorlcote Milling has outstanding a 1...Ch. 24 - Convertible bonds This question illustrates that...Ch. 24 - Prob. 28PS
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