Determining values Convertible bond Craig's Cake Company has an outstanding issue of 17-year convertible bonds with...
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Determining values Convertible bond Craig's Cake Company has an outstanding issue of 17-year convertible bonds with a $1,000 par value. These bonds are convertible into 65 shares of common stock. They have a 16% annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 17% a. Calculate the straight bond value of this bond. b. Calculate the conversion (or stock) value of the bond when the market price is $23 per share of common stock c. What is the minimum market value of the bond? a. The straight value of the bond is $(Round to the nearest cent.) b. The conversion (or stock) value of the bond is $ c. The minimum market value of the bond is S b (Round to the nearest dollar) (Round to the nearest cent) Determining values Convertible bond Craig's Cake Company has an outstanding issue of 17-year convertible bonds with a $1,000 par value. These bonds are convertible into 65 shares of common stock. They have a 16% annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 17% a. Calculate the straight bond value of this bond. b. Calculate the conversion (or stock) value of the bond when the market price is $23 per share of common stock c. What is the minimum market value of the bond? a. The straight value of the bond is $(Round to the nearest cent.) b. The conversion (or stock) value of the bond is $ c. The minimum market value of the bond is S b (Round to the nearest dollar) (Round to the nearest cent)
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Related Book For
Principles of Managerial Finance
ISBN: 978-0134476315
15th edition
Authors: Chad J. Zutter, Scott B. Smart
Posted Date:
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