Question: Singapore Enterprise is considering an exchangeable bond issue where each bond can be exchanged for 162A shares of Malaysian Palm Oil Company. The latter company's

Singapore Enterprise is considering an exchangeable bond issue where each bond can be exchanged for 162A shares of Malaysian Palm Oil Company. The latter company's stock is currently selling for $50 a share. At what premium over exchange value (expressed as a percentage) will the bonds be sold if they are sold for $1,000 a bond? Are there advantages to this type of financing versus a convertible issue?

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