Crystal Cafes recently sold a $2,000-par-value, 10-year convertible bond with an 8% coupon interest rate. The interest

Question:

Crystal Cafes recently sold a $2,000-par-value, 10-year convertible bond with an 8% interest rate. The interest payments will be paid annually at the end of each year and the principal will be repaid at maturity. A similar bond without a conversion feature would have sold with a 9% interest rate. What is the minimum price that the Crystal Cafes’ convertible bond should sell for?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...