Option value of the bond


The appropriate interest rate is 10%. The current stock price is $12 per share. Each convertible is trading at $400 in the market. What is the straight bond value? What is the conversion value? What is the option value of the bond? What is the straight bond value? $1,000 SBV = = $385.54 10 (1.10) What is the conversion value? 25 shares What is the option value of the bond?

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Business Management: Option value of the bond
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