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.



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  • CreatedFebruary 25, 2015
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