Question: Please show all work - thank you! 5. (20 points) Solve: What is the market value of a 4% coupon, 5 year, $1,000 bond when
Please show all work - thank you!

5. (20 points) Solve: What is the market value of a 4% coupon, 5 year, $1,000 bond when required interest rate is 3%? (Hint: remember to use appendix for PVIF and PVIFA). 6 SIS 6. You bought an XYZ Corp $1,000, 5% convertible bond for $1,000. It has a conversion feature allowing you to convert the bond into 50 shares of XYZ common stock. a. (10 points) At what stock price would converting the bonds into stock result in a break even trade? b. (10 points) One year from now, the stock price is $25. Convert the bond, sell the stock at $25, add in the bond interest, and calculate the total return in dollars and as a yield of the original $1,000 investment
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
