What purpose does the variety in bond features (types and characteristics) serve?
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
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?
Florida Enterprises is considering issuing a 10-year convertible bond that will be priced at its $1,000 par value. The bonds have an 8.0 percent annual coupon rate, and each bond can be converted into 20 shares of common stock. The stock currently sells at $40 a share, has an expected dividend in the coming year of $5, and has an expected constant growth rate of 5.0 percent. What is the estimated floor price of the convertible at the end of Year 3 if the required rate of return on a similar straight-debt issue is 10.0 percent?
Florida Enterprises is considering issuing a 10-year convertible bond that will be priced at its $1,000 par value. The bonds have an 8.0 percent annual coupon rate, and each bond can be converted into 20 shares of common stock. The stock currently sells at $40 a share, has an expected dividend in the coming year of $5, and has
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
Peterson Securities recently issued convertible bonds with a $1000 par value. The bonds have a conversion price of $40 a share. What is the convertible issue's conversion ratio?
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
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, 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
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
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
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
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