Assume the current stock price is $100. Next period it can take a value of either 120
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Assume the current stock price is $100. Next period it can take a value of either 120 or 80. If the return on $1 invested today for one period is 3%, then how much will a zero-coupon convertible bond be worth today if the conversion ratio is 1?
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The payoff of the CB after one period will be 120 given conversion ...View the full answer
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