Question 21 10 pts You are considering purchasing a new issue of convertible bonds by The...
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Question 21 10 pts You are considering purchasing a new issue of convertible bonds by The Technoverve Co. These securities have a face value of $1,000, pay 1.10% (annual) coupons, mature in three years, and have a conversion ratio of 26.8456. You have analyzed several straight-bonds issued by firms in the industry, and you feel that it is reasonable to assume that the straight- bond component of these bond is $850. Technoverve's stock is currently trading for $28.62, you estimate that the Sigma of the shares is 0.35, and the current yield on three-year T- Bonds is 4.25%. Based on these values and your assumptions, what is a reasonable value for the instruments? $995.12 $1,092.00 $1,249.81 $1,029.22 $1,185.79 Question 21 10 pts You are considering purchasing a new issue of convertible bonds by The Technoverve Co. These securities have a face value of $1,000, pay 1.10% (annual) coupons, mature in three years, and have a conversion ratio of 26.8456. You have analyzed several straight-bonds issued by firms in the industry, and you feel that it is reasonable to assume that the straight- bond component of these bond is $850. Technoverve's stock is currently trading for $28.62, you estimate that the Sigma of the shares is 0.35, and the current yield on three-year T- Bonds is 4.25%. Based on these values and your assumptions, what is a reasonable value for the instruments? $995.12 $1,092.00 $1,249.81 $1,029.22 $1,185.79
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