Question: Conversion ratio= 50 Current stock price is 16 dollars per share. Convertible bond is currently trading at 1000. Coupon on the convertible bond is 6.0%.

Conversion ratio= 50

Current stock price is 16 dollars per share.

Convertible bond is currently trading at 1000.

Coupon on the convertible bond is 6.0%.

Straight value of bond= 800

Calculate value of the option embedded in the convertible bond

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