Question: Convertible bond problem You are looking at the risk and return of investing in a convertible bond versus the companys common stock. You see the

Convertible bond problem You are looking at the risk and return of investing in a convertible bond versus the companys common stock. You see the company has issued a convertible bond with $1000 par value, 10 years to maturity, 6% coupon (assume annual pay for simplicity). The bond is convertible at any time into 20 shares of stock. The stock is currently trading at $42 per share. This company also has some nonconvertible bonds outstanding which have 9 years to maturity, and which are trading with a 7% YTM. What is the convertible bonds straight bond value? What is the convertible bonds conversion value? What approximate assumed price would you expect the convertible bond

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