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Kurt Owns a Convertible Bond That Matures in Three Years

Question 88

Multiple Choice

Kurt owns a convertible bond that matures in three years.The bond has an 8 percent coupon and pays interest semi-annually.The face value of the bond is $1,000 and the conversion price is $25.Similar bonds have a market return of 9.25 percent.The current price of the stock is $26.50 per share.What is the straight bond value?


A) $948.20
B) $967.89
C) $972.80
D) $987.78
E) $991.15

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