Question: I need help finding the accurate solution to this general accounting problem with valid methods. A company issues a 25-year callable, convertible bond with a

I need help finding the accurate solution to this general accounting problem with valid methods.

A company issues a 25-year callable, convertible bond with a 6.5% annual coupon and a face value of $1,000. The bond includes a conversion price of $40, while the current stock price is $32. Comparable non-convertible bonds yield 8.5%. What is the conversion premium? a) $5 b) $6 c) $8 d) $10 e) $12

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