In December 2009, Collingwood Corp. decided to issue 100,000 convertible bonds, maturing in December 2017. The bonds
Question:
In December 2009, Collingwood Corp. decided to issue 100,000 convertible bonds, maturing in December 2017. The bonds have a face value of $1,000 and promise an annual coupon payment of 5.75 percent. Conversion ratio of these bonds is 25.32, and it is known that Collingwood Corp.’s common shares were trading at $32.50 in December 2009. These bonds are rated A-, and straight bonds from similar companies with similar maturity yield 9 percent.
Current market price of these bonds is $1,051. Calculate the conversion price, conversion value, SBV, floor value, and the conversion premium for these bonds.
CouponA coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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Conversion price CP ParCR 1000 2532 3949 Conversion Value CV CRP ...View the full answer
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Related Book For 
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary
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