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Convertible Bonds

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

Standard Olive: Convertible Bond Calculations

Standard Olive Co. has a convertible bond outstanding with a coupon rate of 9 percent and a maturity date of 15 years. Comparable nonconvertible bonds of the same risk class carry a 10 percent return. The conversion ratio is 25. Presently the common stock is selling for $30 per share. a. What is the current price of the b

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

Fernandez Guitars: Computer Conversion

Fernandez Guitars, has a convertible bond quoted on the NYSE bond market at 85. (Bond quotes represent percentage of par value. Thus, 70 represents $700, 80 represents $800, and so on.) The bond matures in 15 years and carries a coupon rate of 6½ percent. The conversion price is 20, and the common stock is currently selling for

If the KIC bonds are non-callable, what is the price of the bonds?

KIC, Inc., plans to issue $5 million of perpetual bonds. The face value of each bond is $1,000. The annual coupon on the bonds is 12 percent. Market interest rates on one-year bonds are 11 percent. With equal probability, the long-term market interest rate will be either 14 percent or 7 percent next year. Assume investors are ri

Convertible Bond: Will the Holder Convert or Wait?

A firm currently has outstanding a 9 percent, $1,000 convertible bond. The bond is convertible into 100 shares of common stock at a conversion price of $10 per share and callable at $1,090. The current market price of the firm's stock is $12 per share. The bond holder will most likely: Allow the call to be exercised realizin

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