Problem_Set__7

Problem_Set__7 - BusM 401 Problem Set #7 Convertible Bonds...

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BusM 401 Problem Set #7 Convertible Bonds Instructions: Complete all questions. This problem set is worth 10 points. Problems sets are graded on effort and completeness; you must show your work in order to get full credit. Short answers (“checkpoints”) are available for some questions on Blackboard so that you can check your answers. Full solutions are available on Blackboard after the problem set is due. 1. In March 1999 CNET issued 7-year convertible bonds with a coupon rate of 5%. Each $1,000 face value bond could be converted at any time before maturity into 26.7 shares of CNET stock. When the bonds were issued, the price of CNET stock was $32.22. By April 1999 the price of CNET stock had risen to $71.38. Find the conversion ratio, the conversion price, and the conversion value of the $1,000 face value CNET convertible bond as of April 1999. 2. In 2003 James Holdings issued a 4 ¾ percent convertible subordinated debenture due 2008. The debenture is convertible at any time at a conversion price is $47.00 and the
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Problem_Set__7 - BusM 401 Problem Set #7 Convertible Bonds...

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