A convertible bond has a face value of $5,000 and a conversion price of $80. The bond has a 6 percent coupon, pays interest semi-annually, and matures in 12 years. Similar bonds are yielding 7.5 percent. The current price of the stock is $41.20 per share. What is the conversion value of this bond?
A) $1,680
B) $2,415
C) $2,575
D) $4,651
E) $5,000
Correct Answer:
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