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    Convertible bond's conversion premium

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    A $1000 par value convertible bond has a conversion price of $50. It is currently selling for $1120 despite the fact that the bond's coupon rate and the market rate are equal. The common stock obtained upon conversion is selling for $54 per share. What is the convertible bond's conversion premium?

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    A $1000 par value convertable bond has a conversion price of $50. It is currently selling for $1120 despite the fact that the bond's coupon rate and the market rate are equal. The common stock obtained upon conversion is selling for $54 per share. What is the convertable bond's conversion ...

    Solution Summary

    The solution calculates a convertible bond's conversion premium.

    $2.19

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