A company is planning in issuing convertible 5-year bonds


A company is planning in issuing convertible 5-year bonds with semi-annual coupons paying 5% with a conversion ratio of 50. If the company issued straight debt, it would be required to pay 6.5%. The current price of its stock is $20. It is expected that the stock's price will grow at 10% per year. What will be the return for an investor if conversion takes place at the end of year 5? Assume that the bond sold at par value.

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Financial Management: A company is planning in issuing convertible 5-year bonds
Reference No:- TGS01735319

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