Question: Consider the convertible bond by Miser Electronics: par value is $1, 000; coupon rate is 8.5%; market price of convertible bond is $900; conversion ratio

Consider the convertible bond by Miser Electronics: par value is $1, 000; coupon rate is 8.5%; market price of convertible bond is $900; conversion ratio is 30; estimated straight value of bond is $700. Assume that the price of Miser Electronics common stock is $25 and that the dividend per share is $1 per annum. Now suppose that the price of the common stock declines from $25 to $10. What would be the return realized if $25 had been invested in the common stock?

-0.2222

-0.6

-0.5

-0.1423

None of the options

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