Determining values-Convertible bond Eastern Clock Company has an outstanding issue of convertible bonds with a $1000 par value These bonds are convertible to 50 shares of common stock. They have a 10% annual coupon interest rate and a 20-year maturity The interest rate on a straight bond of similar risk is currently 12% a. Calculate the straight bond value of the bond b. Calculate the conversion for stock) value of the bond when the market price of the common stock is $15, $20, $23. $30 and 545 per share c. For each of the stock prices given in part b at what price would you expect the bond to sell? Why? d. What is the least you would expect the bond to sell for regardless of the common stock price behavior? a. The straight value of the bond is (Round to the nearest cont) b. The conversion for stock) value of the bond when the market price of the common stock is $15 per share is (Round to the nearest dolar) The conversion for stock) value of the bond when the market price of the common stock is $20 per share is $ (Round to the nearest dollar) The conversion (or stock) value of the bond when the market price of the common stockis 525 per share is (Round to the nearest dollar) The conversion (or stock) value of the bond when the market price of the common stock is so per share is (Round to the nearest dollar) ra Overal sa The conversion for stock) value of the bond when the market price of the common stock is $45 por share is SC (Round to the nearest dollar) W o r, regardless of the common stock price behavior? c. For the stock price of $15 the price you would expect the bond to sell at is (Round to the nearest cent) For the stock price of $20, the price you would expect the bond to sell at is . For the stock price of $23, the price you would expect the bond to sell at iss For the stock price of $30, the price you would expect the bond to sellais (Round to the nearest dollar) (Round to the nearest dollar) (Round to the nearest dollar For the stock price of $45, the price you would expect the bond to sell a s o und to the nearest dollar) Why would you expect the bonds to sell at these prices? (Select the best answer below) O O A As the share price decreases the bond will start trading at a premium to the pure bond value due to the increased probability of a profitable conversion Al higher prices, the bond will trade at its conversion V B. As the share price increases, the bond will start trading at a discount to the pure bond value due to the increased probability of a profitable conversion Algher prices, the band will trade at its conversion value C. As the share price decreases the bond will start trading at a premium to the pure bond value due to the increased probability of a profitable co o n At higher DA, the bond wil trade of below its conversion value OD As the share price increases the bond will start trading at a premium to the pure bond valle due to the increased probability of a probable c o n Algher COS, the bond witrade lits conversion value O Click to select your answer version value to the pure bond value due to the increased probability of a profitable conversion At hig d. then you would expect the bond to sell Tor, regardless of the common stock price behavior is Click to select your answer(s). (Round to the nearest cent)