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Paladinen [302]
3 years ago
5

A convertible bond has a face value of $5,000, a conversion price of $40, a coupon rate of 6 percent, semi-annual payments, and

a maturity of 12 years. Similar bonds are currently yielding 7.5 percent. The current price of the related stock is $38 per share. What is the conversion value of this bond?
Business
1 answer:
Artist 52 [7]3 years ago
6 0

Answer:

The Conversion Value of the bond = $4,750

Explanation:

Conversion Value = Face value / Conversion price * Current stock price

Conversion Value = $5,000 / 40 * 38 = $4,750

Conversion Value = $4,750

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3 years ago
Suppose that Portugal and Switzerland both produce fish and olives. Portugal's opportunity cost of producing a crate of olives i
Rashid [163]

Answer:

Portugal has comparative advantage in producing olives.

Switzerland has comparative advantage in producing fish.

Portugal can gain from trade if it receives more than 3 pounds of fish per crate of olives.

Switzerland can gain from trade if it receives more than 1/11 of olives for each pound of fish.

d. 18 pounds of fish per crate of olives.

Explanation:

Switzerland and Portugal both countries can produce Olives and fish. One country has advantage in producing fish while other has advantage in producing olives. Both countries can gain from trade if they find a intermediary way so that both countries can be in win win situation. It is beneficial for Portugal if it trades with Switzerland if it receives more than 3 pounds of fish.

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3 years ago
the activities a firm undertakes to create a certain perception of its product in the eyes of the target market are referred to
Dima020 [189]

Answer:

Positioning

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Therefore according to the given situation, the positioning is the right answer

3 0
3 years ago
Graphical Designs is offering 10-10 preferred stock. The stock will pay an annual dividend of $10 with the first dividend paymen
tresset_1 [31]

Answer:

PV of the stock today = $115.83

Explanation:

We will use the discounted cash flows approach to calculate the price of the stock today. This approach values the stock by accumulating the present value of all the expected future cash flows from the stock/asset.

As the preferred stock pays a constant dividend after equal intervals of time and for an indefinite period, it can also be treated as a perpetuity. Thus, the formula for the present value of perpetuity will be used to calculate the price of the stock at year 10 that we will discount back to today.

Present value of perpetuity = Cash flow  / expected rate of return

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PV of the stock today = 192.3076923 / (1+0.052)^10

PV of the stock today = $115.83

6 0
3 years ago
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