THE FOLLOWING DATA APPLY TO SAUNDERS CORP’S CONVERTIBLE BONDS: MATURITY: 605

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he following data apply to Saunders Corp’s convertible bonds:
Maturity: 10 Price: $30 PV: $1000 Conversion price: $35 Annual Coupon: 5% Straight-debt yield: 8%
a. What is the bond’s conversion ratio?
b. What is the bond’s conversion value?
c. What is the bond’s straight-debt value?
d. Based on your answers to the 3 preceding questions, what is the minimum price (floor price) at which Saunders’ bonds should sell?
    • 11 years ago
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