Rajesh has paid 1,200 (Indian rupee) for a convertible bond that carries a 7% coupon and has
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Rajesh has paid 1,200 (Indian rupee) for a convertible bond that carries a 7% coupon and has 20 years to maturity. The bond can be converted to 24 shares of stock, which are now trading at 50,000 a share. Find the bond investment value of this issue, given that comparable nonconvertible bonds are currently selling to yield 8%.
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Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
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