A 4.75% coupon convertible bond has a par value of $1,000. The conversion ratio is 23 and the market conversion premium per share is 1.75. The underlying stock pays a dividend of $1.15 per share. How many years will it take for the favorable income from owning the bond (instead of the stock) to payback the market conversion premium (Premium Payback Period)?

Answer rating: 100% (QA)

To calculate the Premium Payback Period for owning the bond instead of the stock we need to compare ... View the full answer