Question: A convertible bond has the following features. What is its conversion premium? Coupon .................................................................. 5.25% Maturity ........................................................ June 15, 2025 Market price of bond ..................................................

A convertible bond has the following features. What is its conversion premium?
Coupon .................................................................. 5.25%
Maturity ........................................................ June 15, 2025
Market price of bond .................................................. $77.50
Market price of underlying common stock ........................ $28.00
Annual dividend ...................................................... $1.20
Conversion ratio ............................................... 20.83 shares

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