The Floor Value Of A Convertible Bond Course Hero

The firm s common stock is currently selling for.

The floor value of a convertible bond course hero.

It should trade for at least its floor value regardless of how low the stock drops. Floor value the floor value of a convertible bond is the greater of 1. A convertible bond pays interest annually at a coupon rate of 5 on a par value of 1 000. Bond investment value value as a corporate bond without the conversion option based on the convertible bond s cash flow if not converted.

Earnings were 750 000 after paying 250 000. The bond floor is the value at which the. The lowest value that convertible bonds can fall to given the present value of the remaining future cash flows and principal repayment. Trusty has 800 000 outstanding shares paying a 0 50 annual dividend.

Course hero has all the homework and study help you need to. Each bond has a par value of 1000. Step 1 sign in to your. The floor or pure bond value of a convertible bond is found by a.

Multiplying the bond s conversion premium by the price of the firm s common shares. The pure bond value. The floor price of a convertible bond cannot fall below a. 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. Multiplying the price of the firm s common stock by the conversion ratio and adding the present value of the bond s face value. The xlarge corporation has a convertible bond outstanding with a conversion price of 28 per share the 1 000 par value bonds have a 5 coupon rate and 20 years to maturity. Why join course hero.

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 bond s conversion premium by the price of the firm s common stock. Multiplying the price of the firm s common stock by the conversion ratio b.