You are a financial analyst hired to value a new 20-year callable, convertible bond. the bond has8% coupon payable annually. the conversion price is 120 the stock currently sells for 1000.the stock price is expected to rise by 15% per year. The bond is callable at 1000.the required return on bond is 12%
Calculate the straight bond value
Calculate the conversion value
How long would it take for the conversion value to exceed a call price?