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Convertible Bonds

A. What is the minimum value of the bond? b. If the stock price were to grow by 15 percent per year forever, how long would it take for the bond's conversion value to exceed $1,100?

Bernanke Corp. has just issued a 30 year callable, convertible bond with a coupon rate of 7 percent annual coupon payments. The bond has a conversion price of $125. The company's stock is selling for $32 per share. The owner of the bond will be forced to convert if the bond's conversion value is ever greater than or equal to $1,

Foundations of Financial Management - text questions

Hello, I need help answering the following text questions. Prepare answers to the following questions and exercises from the text: Foundations of Financial Management - Chapter 19: 7 Chapter 19: 8, 9, Please show your work as well. See attachment Thank you Text Questions and Exercises - WEEK 5 Prepare answers

Conversion (or stock) value of convertible bonds?

What is the conversion (or stock) value of each of the following convertible bonds? a. A $1,000-par-value bond that is convertible into 25 shares of common stock. The common stock is currently selling for $50 per share. b. A $1,000-par-value bond that is convertible into 12.5 shares of common stock. The common stock is cur

Multiple choice questions on stocks, bonds, converible bonds, warrants

1. A firm with excess cash and few investment alternatives might logically: a. Declare a stock dividend b. Split the stock 2-for-1 c. repurchase some of its own stock d. choose to issue preferred stock 2. A warrant which does not expire until several years in the future and which provides its owner the opportunity to b


How do companies manage the maturity structure of their debt? How can knowledge of call options help a financial manager to better understand warrants and convertibles? As an investor are convertible securities advantageous or disadvantageous? Why?

Convertible Bond Problem

Consider a Convertible Bond with Par value of $1,000, Coupon rate of 9.5%. The Market price of the convertible bond is $1,000, the Conversion ratio is 37.383, the estimated straight value of bond is $510 and the Yield to maturity of straight bond is 18.7%. Assume that the price of the common stock is $23 and that the dividend p

What is the convertible bond's conversion premium?

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?

Ghostbusters Corporation issues $300,000 of 9% bonds

Dear OTA, Please help me with steps Thanks 1) Ghostbusters Corporation issues $300,000 of 9% bonds, due in 10 years, with interest payable semiannually. At the time of issue, the market rate for such bonds is 10%. Computer the issue price of the bonds. 2) Toy Story Corporation issued $500,000 of 6% bonds on May 1


Your company has a tax rate of 35%. The interest on long term bonds is 10%. What is the after tax cost of this component of your capital structure?

Convertible Debt

Question: A lot of small companies got financing in the form of convertible debt. I know this is like ordinary debt, but it pays a regular interest and the debtholders have the right to convert it to equity. Why would companies chose this instrument?

Figuring info related to bonds 215

Fifteen years ago, Roop Industries sold $400 million of convertible bonds. The bonds had a 40-year maturity, a 5.75% coupon rate, and paid interest annually. They were sold at their $1,000 par value. The conversion price was set at $62.75; the common stock price was $55 per share. The bonds were subordinated debentures, and

Convertible bonds and stock warrants

For each of the unrelated transactions described below, present the entry(ies) required to record the bond transactions. 1) On August 1, 2007, Ryan Corporation called its 10% convertible bonds for conversion. The $8,000,000 par bonds were converted into 320,000 shares of $20 par common stock. On August 1, there was $700,0

Hannon's Convertible Bonds

Hannon Home Products, Inc., recently issued $430,000 worth of 8 percent convertible debentures. Each convertible bond has a face value of $1,000. Each convertible bond can be converted into 28 shares of the firm's common stock anytime before maturity. The current price of Hannon's common stock is $31.25 per share, and the market

Convertible bond , Price appreciation with a warrant

1)  Laser Electronics Company has $30 million in 8 percent convertible bonds outstanding. The conversion ratio is 50; the stock price is $17; and the bond matures in 15 years. The bonds are currently selling at a conversion premium of $60 over their conversion value. If the price of the common stock rises to $23 on this date n

Bond Features

What purpose does the variety in bond features (types and characteristics) serve?

Basic and Diluted EPS

The following data relates to Abel, Inc. for the year ended December 31, 2003: Net income (30% income tax rate) $3,000,000 Common shares outstanding January 1, 2003 1,000,000 shares Common stock issued June 1, 2003 for cash 250,000 shares Common stock split on July 15, 2003 at rate of 2 shares for 1 10% convertibl

Multiple Choice Questions:

25.The floor value for a convertible bond is: A.the conversion value B.the conversion price C.The strike price D.the pure bond value 26.The bonds of Goniff Bank & Trust have a conversion premium of $90. Their conversion price is $20. The common stock price is $16.50. What is the price of the convertible bonds?

Capital Decisions: Equity, Convertible Bonds, Warrants

The Howland Carpet Company has grown rapidly during the past 5 years. Recently, its commercial bank urged the company to consider increasing its permanent financing. Its bank loan under a line of credit has risen to $250,000, carrying an 8 percent interest rate. Howland has been 30 to 60 days late in paying trade creditors. D

Convertible security, wheat futures contracts

1. The following facts apply to a convertible security: Conversion price $25/share Coupon rate 6% Par value $1,000 Yield on nonconvertible debenture of same quality 10% Market value of straight bond of same quality with coupon rate of 10% $950 Stock price $24/share a. What is the minimum price at which the convertible sh

Convertible Security

An advantage of a convertible security is that it provides for deferred common stock financing. The purpose of deferring the sale of common stock is to ______ increase the leverage of the firm, dilute the owership interest, minimize dilution in earnings per share, or time the sale of common stock when the price per shar

Please help answer!

Eastern Digital Corp. has a convertible bond outstanding with a coupon rate of 9 percent and a maturity date of 20 years. It is rated Aa, and competitive, non convertible bonds of the same rick class carry a 10 percent return. The conversion ratio is 40. Currently teh common stock is selling for $18.25 per share on the New Y

Conversion of convertible bonds

Successful forced conversion of convertible bonds through a call requires that a. call price exceed par value b. conversion value exceed call price c. bond value exceed conversion value