You have a convertible bond with a par value of 100,000 with a 10% coupon. It can be converted into shares at a conversion price of 5,000€. The current price is 4,300€. If the dividends of the share are currently 200€, and if these grow at a rate of 6% per year, would you, as a bondholder, convert or not in 5 years' time? Suppose that the share price coincides with its intrinsic value/objective price and that there is 10.93%.

Answer rating: 100% (QA)

As a bondholder I would not convert The conversion price of 5000 is too high to make a ... View the full answer