A convertible bond pays interest annually at a coupon rate of 4 percent on a par...
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A convertible bond pays interest annually at a coupon rate of 4 percent on a par value of $1,000. The bond has 5 years maturity remaining and the discount rate on otherwise identical non-convertible debt is 7 percent. The bond is convertible into 50 shares of common stock. Today's closing stock price was $18. What is the floor value of this bond? Multiple Choice $880. $1,050. $900. $1,000. $800. The treasurer of a small bank has borrowed funds for 3 months at an interest rate of 5.50% and has lent funds for 9 months at 6.50%. The total amount is USD25 million. To cover his exposure created by the mismatch of maturities, the dealer needs to borrow another USD25 million for 6 months, in 3 months' time, and hedge the position now with an FRA. What is the treasurer's break-even forward rate of interest, assuming no other costs? Multiple Choice 5.50% 6.00% 6.50%. 7.30%. 6.91%. A convertible bond pays interest annually at a coupon rate of 4 percent on a par value of $1,000. The bond has 5 years maturity remaining and the discount rate on otherwise identical non-convertible debt is 7 percent. The bond is convertible into 50 shares of common stock. Today's closing stock price was $18. What is the floor value of this bond? Multiple Choice $880. $1,050. $900. $1,000. $800. The treasurer of a small bank has borrowed funds for 3 months at an interest rate of 5.50% and has lent funds for 9 months at 6.50%. The total amount is USD25 million. To cover his exposure created by the mismatch of maturities, the dealer needs to borrow another USD25 million for 6 months, in 3 months' time, and hedge the position now with an FRA. What is the treasurer's break-even forward rate of interest, assuming no other costs? Multiple Choice 5.50% 6.00% 6.50%. 7.30%. 6.91%.
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To calculate the floor value of a convertible bond with the given parameters Coupon rate 4 Par value ... View the full answer
Related Book For
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
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