What’s the answer and the working Given the following information concerning a convertible bond:• Principal: $1,000Coupon: 5 percent. Maturity: 13 yearsCall price: $1,045. Conversion price: $39 (that is, 25 shares)Market price of the common stock: $33▪ Market price of the bond: $1,020a. What is the current yield of this bond? Round your answer to two decimal places.%b. What is the value of the bond based on the market price of the common stock? Use the given above number of shares into which the bond may be converted. Round your answer to the nearest dollar.$c. What is the value of the common stock based on the market price of the bond? Use the given above number of shares into which the bond may be converted. Round your answer to the nearest cent.$d. What is the premium in terms of stock that the investor pays when he or she purchases the convertible bond instead of the stock? Round your answer to the nearest dollar.$e. Nonconvertible bonds are selling with a yield to maturity of 7 percent. If this bond lacked the conversion feature, what would the approximate price of the bond be? Assume that the bond pays interest annually. UseAppendix B and Appendix D to answer the question. Round your answer to the nearest dollar.$f. What is the premium in terms of debt that the investor pays when he or she purchases the convertible bond instead of a nonconvertible bond? Round your answer to the nearest dollar.$g. What is the probability that the corporation will call this bond?Since the price of the stock is -Select-than the exercise price of the bond, the probability of the bond being called is [-Select-

Given: Particulars Amount Principal Amount $1,000.00 Coupon rate 5% Maturity 13 Call…

Given the following information concerning a convertible bond: ▪ Principal: $1,000 • Coupon: 5 percent . Maturity: 13 years Call price: $1,045 . Conversion price: $39 (that is, 25 shares) • Market price of the common stock: $33 • Market price of the bond: $1,020 a. What is the current yield of this bond? Round your answer to two decimal places. % b. What is the value of the bond based on the market price of the common stock? Use the given above number of shares into which the bond may be converted. Round your answer to the nearest dollar. $ c. What is the value of the common stock based on the market price of the bond? Use the given above number of shares into which the bond may be converted. Round your answer to the nearest cent. $ d. What is the premium in t

Given the following information concerning a convertible bond: ▪ Principal: $1,000 • Coupon: 5 percent . Maturity: 13 years Call price: $1,045 . Conversion price: $39 (that is, 25 shares) • Market price of the common stock: $33 • Market price of the bond: $1,020 a. What is the current yield of this bond? Round your answer to two decimal places. % b. What is the value of the bond based on the market price of the common stock? Use the given above number of shares into which the bond may be converted. Round your answer to the nearest dollar. $ c. What is the value of the common stock based on the market price of the bond? Use the given above number of shares into which the bond may be converted. Round your answer to the nearest cent. $ d. What is the premium in t

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 6FPE

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Assume that a $10,000.00 bond paying 8.5% interest is currently selling at 106. What is the current selling price of the bond? What is the current yield of this bond? a. b. (
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