Pittsburgh Steel Company has a convertible bond outstanding, trading in the marketplace at $960 The par value is $1,000, the coupon rate is 10 percent, and the bond matures in 20 years The conversion price is $55 and the companys common stock is selling for $48 per share Interest is paid semiannual...

Pittsburgh Steel Company has a convertible bond outstanding, trading in the marketplace at $960. The par value

Question:

Pittsburgh Steel Company has a convertible bond outstanding, trading in the marketplace at $960. The is $1,000, the rate is 10 percent, and the bond matures in 20 years. The conversion price is $55 and the company’s is selling for $48 per share. Interest is paid semiannually. If the interest rate on similar bonds that are not convertible are currently yielding 12 percent, what will be the pure bond value of the Pittsburgh Steel Company bonds? (Use semiannual analysis.)

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Coupon
A 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... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...