The Floor Value Of A Convertible Bond Course Hero
The Floor Price Of A Convertible Bond Cannot Fall Below A The Conversion Ratio Course Hero
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The bond has 10 years maturity remaining and the discount rate on otherwise identical non convertible debt is 6 5.
The floor value of a convertible bond course hero. Earnings were 750 000 after paying 250 000. The lowest value that convertible bonds can fall to given the present value of the remaining future cash flows and principal repayment. The pure bond value. Multiplying the price of the firm s common stock by the conversion ratio and adding the present value of the bond s face value.
It should trade for at least its floor value regardless of how low the stock drops. A convertible bond pays interest annually at a coupon rate of 5 on a par value of 1 000. The value of these payments represents a convertible bond s floor or minimum value. Why join course hero.
The xlarge corporation has a convertible bond outstanding with a conversion price of 28 per share the 1 000 par value bonds have a 5 coupon rate and 20 years to maturity. The firm s common stock is currently selling for. Step 1 sign in to your. The bond has 10 years maturity remaining and the discount rate on otherwise identical non convertible debt is 6 5.
Multiplying the price of the firm s common stock by the conversion ratio b. The bond floor is the value at which the. Trusty has 800 000 outstanding shares paying a 0 50 annual dividend. Multiplying the bond s conversion premium by the price of the firm s common stock.
The floor price of a convertible bond cannot fall below a. A convertible bond pays interest annually at a coupon rate of 5 on a par value of 1 000. The floor or pure bond value of a convertible bond is found by a. Floor value the floor value of a convertible bond is the greater of 1.
Course hero has all the homework and study help you need to. The floor or pure bond value of a convertible bond is found by a. Each bond has a par value of 1000. Bond investment value value as a corporate bond without the conversion option based on the convertible bond s cash flow if not converted.
Final A Convertible Security Is One That Can Be Converted Into Common Stock Only At The Option Of The Issuer False The Face Value Of A Convertible Course Hero
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The Gives The Number Of Shares For Which Each Convertible Bond Can Be Exchanged Course Hero
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