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08-08-2020
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A convertible bond has a face value of $5,000, a conversion price of $40, a coupon rate of 6 percent, semi-annual payments, and a maturity of 12 years. Similar bonds are currently yielding 7.5 percent. The current price of the related stock is $38 per share. What is the conversion value of this bond?

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Tundexi Tundexi

11-08-2020

Answer:

The Conversion Value of the bond = $4,750

Explanation:

Conversion Value = Face value / Conversion price * Current stock price

Conversion Value = $5,000 / 40 * 38 = $4,750

Conversion Value = $4,750

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