The Floor Value Of A Convertible Bond Course Hero

Earnings were 750 000 after paying 250 000.

The floor value of a convertible bond course hero.

Why join course hero. Bond investment value value as a corporate bond without the conversion option based on the convertible bond s cash flow if not converted. Multiplying the price of the firm s common stock by the conversion ratio and adding the present value of the bond s face value. It should trade for at least its floor value regardless of how low the stock drops.

The floor or pure bond value of a convertible bond is found by a. The bond has 10 years maturity remaining and the discount rate on otherwise identical non convertible debt is 6 5. Multiplying the bond s conversion premium by the price of the firm s common stock. The pure bond value.

Step 1 sign in to your. A convertible bond pays interest annually at a coupon rate of 5 on a par value of 1 000. Has 20 000 7 bonds convertible into 30 shares per bond. Course hero has all the homework and study help you need to.

The firm s common stock is currently selling for. Multiplying the bond s conversion premium by the price of the firm s common shares. Floor value the floor value of a convertible bond is the greater of 1. Multiplying the price of the firm s common stock by the conversion ratio b.

The value of these payments represents a convertible bond s floor or minimum value. Multiplying the price of the firm s common stock by the conversion ratio b. A convertible bond pays interest annually at a coupon rate of 5 on a par value of 1 000. The floor or pure bond value of a convertible bond is found by a.

Each bond has a par value of 1000. The bond has 10 years maturity remaining and the discount rate on otherwise identical non convertible debt is 6 5. Trusty has 800 000 outstanding shares paying a 0 50 annual dividend. The bond floor is the value at which the.