Question: Determining values-Convertible bond Eastern Clock Company has an outstanding issue of convertible bonds with a $2,000 par value. These bonds are convertible into 35 shares

Determining values-Convertible bond Eastern Clock Company has an outstanding issue of

Determining values-Convertible bond Eastern Clock Company has an outstanding issue of convertible bonds with a $2,000 par value. These bonds are convertible into 35 shares of common stock. They have a 9% annual coupon interest rate and a 25-year maturity. The interest rate on a straight bond of similar risk is currently 13%. a. Calculate the straight bond value of the bond. b. Calculate the conversion (or stock) value of the bond when the market price of the common stock is $35 per share. c. 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 cent.)

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