question archive A $1,000 face value 7% convertible bond has a maturity date of five years
A $1,000 face value 7% convertible bond has a maturity date of five years
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A $1,000 face value 7% convertible bond has a maturity date of five years. The conversion price is $40. The market yield on bonds of comparable quality is 8%. The market price of the common stock is $38.50 currently. What is the minimum price at which the convertible bond should sell?
a$962.50
b$960.07
c$1,000.00
d$959.44
e$1,022.50
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