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Homework answers / question archive / A certain 6% annual coupon rate convertible bond ($1000 par value, maturing in 20 years) is convertible at the holder's option into 20 shares of common stock

A certain 6% annual coupon rate convertible bond ($1000 par value, maturing in 20 years) is convertible at the holder's option into 20 shares of common stock

Finance

A certain 6% annual coupon rate convertible bond ($1000 par value, maturing in 20 years) is convertible at the holder's option into 20 shares of common stock. The bond is currently trading at $800. The stock (which pays 75c a share in annual dividends) is currently priced in the market at $35 a share.

What is the bond's conversion price?

What is its conversion ratio?

What is the conversion value of this issue? What is its conversion parity?

What is the conversion premium, in dollars and as a percentage?

What is the bond's payback period?

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