A new 35-year callable convertible bond has a 9 annual


A new, 35-year callable, convertible bond has a 9% annual coupon rate and the conversion price $250. The stock currently sells for $50 and the price is expected to grow at 10% per year. The bond is callable at $1200, but wont’ be called unless the conversion value is $1300. The required rate of return on the bond is 8%. What’s the value of this bond?

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Financial Management: A new 35-year callable convertible bond has a 9 annual
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