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Question
A 4.5 percent, semi-annual coupon bond has a face value of $1,000 and a time to maturity of 4 years. The bonds are convertible into shares of common stock at a conversion price of $42.50. The stock price currently is $40.70. Similar, non-convertible bonds have a yield to maturity of 4.5 percent. The intrinsic value of this bond is _____ and the conversion value is _____.A. $832.62; $982.80
B. $961.06; $957.65
C. $1,014.16; $1,017.50
D. $1,014.16; $982.80
E. $1,006.96; $1,017.50
Answer
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