Business, 30.06.2021 02:20 Lamr

A convertible bond is selling for $967, matures in 15 years, has a $1,000 face value, pays interest semiannually, and has a coupon rate of 8 percent. Similar non-convertible bonds are priced to yield 4.25 percent per six months. The conversion ratio is 20. The stock currently sells for $47.50 a share. Calculate the convertible bond's option value. a. $2.92.
b. $7.27.
c. $1.48.
d. $2.03.

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A convertible bond is selling for $967, matures in 15 years, has a $1,000 face value, pays interest...