Question: Assume you just paid 1 200 for a convertible bond that
Assume you just paid $1,200 for a convertible bond that carries a 7½% coupon and has 15 years to maturity. The bond can be converted into 24 shares of stock, which are now trading at $50 a share. Find the bond investment value of this issue, given that comparable non-convertible bonds are currently selling to yield 9%.
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