XYZ Co. has issued convertibles with face value $100, and the issue price is $100. The market
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XYZ Co. has issued convertibles with face value $100, and the issue price is $100. The market price per share is $20 and the conversion ratio is 4. The bond pays a coupon of 5%, and the dividend rate on equity is 1%. What is the premium on the bond? What is the breakeven period to recover the premium?
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The premium on the bond is the difference between its issue price and the parity value which is The ...View the full answer
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