Today is the morning of Jan 2, Year 5. XYZ Inc has exchange-listed convertible bonds outstanding....
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Today is the morning of Jan 2, Year 5. XYZ Inc has exchange-listed convertible bonds outstanding. The coupon rate is 7.63% with the coupon payable every six months. The yield is 6.37% compounded semi-annually. The maturity is on July 2, Year 14 (i.e. in 9.5 years), and the coupon is payable every January 2 and July 2. Each $1,000 face value convertible bond converts into 51 XYZ shares. The XYZ shares are currently trading at $21.21 per share. The delta of long-dated, at-the-money XYZ call options is 0.8 and is not expected to change with short-term changes in prices of the underlying. Comparable plain-vanilla (non-convertible) bonds with the same maturity, coupon, and credit risk are yielding 6.79%. What is the revised expected price of one convertible bond today if the plain-vanilla bond yields drop by 25 basis points without any changes in the share price? Today is the morning of Jan 2, Year 5. XYZ Inc has exchange-listed convertible bonds outstanding. The coupon rate is 7.63% with the coupon payable every six months. The yield is 6.37% compounded semi-annually. The maturity is on July 2, Year 14 (i.e. in 9.5 years), and the coupon is payable every January 2 and July 2. Each $1,000 face value convertible bond converts into 51 XYZ shares. The XYZ shares are currently trading at $21.21 per share. The delta of long-dated, at-the-money XYZ call options is 0.8 and is not expected to change with short-term changes in prices of the underlying. Comparable plain-vanilla (non-convertible) bonds with the same maturity, coupon, and credit risk are yielding 6.79%. What is the revised expected price of one convertible bond today if the plain-vanilla bond yields drop by 25 basis points without any changes in the share price? Today is the morning of Jan 2, Year 5. XYZ Inc has exchange-listed convertible bonds outstanding. The coupon rate is 7.63% with the coupon payable every six months. The yield is 6.37% compounded semi-annually. The maturity is on July 2, Year 14 (i.e. in 9.5 years), and the coupon is payable every January 2 and July 2. Each $1,000 face value convertible bond converts into 51 XYZ shares. The XYZ shares are currently trading at $21.21 per share. The delta of long-dated, at-the-money XYZ call options is 0.8 and is not expected to change with short-term changes in prices of the underlying. Comparable plain-vanilla (non-convertible) bonds with the same maturity, coupon, and credit risk are yielding 6.79%. What is the revised expected price of one convertible bond today if the plain-vanilla bond yields drop by 25 basis points without any changes in the share price? Today is the morning of Jan 2, Year 5. XYZ Inc has exchange-listed convertible bonds outstanding. The coupon rate is 7.63% with the coupon payable every six months. The yield is 6.37% compounded semi-annually. The maturity is on July 2, Year 14 (i.e. in 9.5 years), and the coupon is payable every January 2 and July 2. Each $1,000 face value convertible bond converts into 51 XYZ shares. The XYZ shares are currently trading at $21.21 per share. The delta of long-dated, at-the-money XYZ call options is 0.8 and is not expected to change with short-term changes in prices of the underlying. Comparable plain-vanilla (non-convertible) bonds with the same maturity, coupon, and credit risk are yielding 6.79%. What is the revised expected price of one convertible bond today if the plain-vanilla bond yields drop by 25 basis points without any changes in the share price?
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Related Book For
Advanced Financial Accounting An IFRS Standards Approach
ISBN: 9781285428765
4th Edition
Authors: Pearl Tan, Chu Yeong Lim, Ee Wen Kuah
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