The following year, Faversham Fish Farm (see Problem 3) flounders Its stock price drops to $10 per share and the market price of the convertible debentures to $440 per debenture The straight bond value goes to $410 Determine the premium over conversion value and the premium over straight bond value...

At 10 a share the conversion value is 250 and the premiumo ...

The following year, Faversham Fish Farm (see Problem 3) flounders. Its stock price drops to $10 per

Question:

The following year, Faversham Fish Farm (see Problem 3) flounders. Its stock price drops to $10 per share and the market price of the convertible to $440 per debenture. The straight bond value goes to $410. Determine the premium over conversion value and the premium over straight bond value. What can you say about the bond value floor?
Debentures
Debenture DefinitionDebentures are corporate loan instruments secured against the promise by the issuer to pay interest and principal. The holder of the debenture is promised to be paid a periodic interest and principal at the term. Companies who...