You purchase a $1,000 bond that is convertible for 20 shares of XYZ stock, which is currently selling for $40 per share. The bond is a 20 year bond…
You purchase a $1,000 bond that is convertible for 20 shares of XYZ stock, which is currently selling for $40 per share. The bond is a 20 year bond with 8% coupons, payable semi-annually. You purchased it to yield 9% to maturity. If you assume that the price of the stock will increase at 7.5% per year, and that you will convert when the value […]
