A convertible bond is selling for $1,222.70. It has 10 years to maturity,a $1,000 face value,and a 10% coupon paid semi-annually. Similar non-convertible bonds are priced to yield 8%. The conversion ratio is 40. The stock currently sells for $30.125 per share. Calculate the convertible bond's option value.

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The Answer of A convertible bond is selling for $1,222.70. It has 10 years to maturity,a $1,000 face value,and a 10% coupon paid semi-annually. Similar non-convertible bonds are priced to yield 8%. The conversion ratio is 40. The stock currently sells for $30.125 per share. Calculate the convertible bond's option value.

A Convertible Bond Is Selling for $1,222