Question: Given the information below, answer the following questions. A convertible bond has the following features: Principal $1,000 Maturity date 20 years Semi-annual interest $40 (8%

  1. Given the information below, answer the following questions.

A convertible bond has the following features:

Principal $1,000

Maturity date 20 years

Semi-annual interest $40 (8% coupon)

Call price $1,050

Exercise price $65 a share

  1. If the price of the stock were $73, what would the investor receive if the bond were called?
  2. What will the investor receive when the bond matures?
  3. A $50 par value convertible preferred stock is convertible into 5 shares (exercise price of $10). The preferred is selling for $75, and the price of the common stock is $12.If the price of the common stock rises to $20, what is the minimum percentage price increase the holder of the preferred stock should experience?

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