Piglet pies has issued a zero-coupon 10-year bond that can


Piglet Pies has issued a zero-coupon 10-year bond that can be converted into 10 Piglet shares. Comparable straight bonds are yielding 8%. Piglet stock is priced at $64 a share.

If the convertible bond is priced at $552, how much are investors paying for the option to buy Piglet shares?

If after one year the value of the conversion option is unchanged, what is the value of the convertible bond?

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Financial Management: Piglet pies has issued a zero-coupon 10-year bond that can
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