Conversion price 52share coupon rate 65 par value 1000, Financial Management

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Conversion price 52share coupon rate 65 par value 1000

(The following facts apply to the next two questions about a convertible bond making semiannual payments.) Conversion price $52/share Coupon rate 6.5% Par value $1,000 Yield on nonconvertible debentures of same quality 8.5% Maturity 25 years Market price of stock $42 /share 23. If the price of the convertible bond is $900, what is the value of the call option embedded in the convertible bond? 24. If you buy the convertible bond, are you willing to convert it now? Why or why not? Please explain.

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