Question: Consider a Tesla convertible note with a $1,000 par value that is convertible into Tesla common stock. It has a coupon of 6%, payable annually.

Consider a Tesla convertible note with a $1,000 par value that is convertible into Tesla common stock. It has a coupon of 6%, payable annually. The bond is priced at $990. This convertible bond has a conversion ratio of 20. The current stock price is $40 per share. What is the conversion value of the bond? What is the conversion premium of the bond?

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