Homework Answers
a]
Conversion value = Conversion Ratio * Current Share Price
Conversion value = 61.3002 * $22.42 = $1,374.35.
b]
It is not profitable to convert because the conversion value is lower than the current bond price.
The investor is better off by keeping the bond since the bond price of $1375 is higher than the value of the shares received on conversion.
Add Answer to:
Need some help with this, thank you!
Hilton Hotels Corp. has a convertible bond issue outstanding....
Hilton Hotels Corp. has a convertible bond issue outstanding. Each bond, with a face value of...
Hilton Hotels Corp. has a convertible bond issue outstanding. Each bond, with a face value of $1,100, can be converted into common shares at a rate of 61.2984 shares of stock per $1,100 face value bond (the conversion rate), or $17.9450 per share. Hilton’s common stock is trading (on the NYSE) at $17.53 per share and the bonds are trading at $1,075. a. Calculate the conversion value of each bond. (Round your answer to 2 decimal places. (e.g., 32.16)) b....
10. A $2 million jumbo CD is paying a quoted 3.55% interest rate on 6-month maturity...
10. A $2 million jumbo CD is paying a quoted 3.55% interest rate on 6-month maturity CDs. If after the CD is issued, the market rate on the CD falls to 3.2%. What is the secondary market price of the CD? A) $1,972,384 B) $1,019,192 C) $2,006,783 D) $2.006,896 E) $2,003,445 11. Hilton Hotels Corp. has a convertible bond issue outstanding. Each bond, with a face value of $1,000, can be converted into common shares at a rate of 61.2978...
Determining values—Convertible bond Craig's Cake Company has an outstanding issue of 20-year convertible bonds with a...
Determining values—Convertible bond Craig's Cake Company has an outstanding issue of 20-year convertible bonds with a $800 par value. These bonds are convertible into 90 shares of common stock. They have a 16% annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 12%. a. Calculate the straight bond value of this bond. b. Calculate the conversion (or stock) value of the bond when the market price is $16 per share of common stock. c. ...
Determining values—Convertible bond Craig's Cake Company has an outstanding issue of 15-year convertible bonds with a...
Determining values—Convertible bond Craig's Cake Company has an outstanding issue of 15-year convertible bonds with a $800 par value. These bonds are convertible into 75 shares of common stock. They have a 12% annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 17%. a. Calculate the straight bond value of this bond. b. Calculate the conversion (or stock) value of the bond when the market price is $23 per share of common stock. c....
Determining values-Convertible bond Craig's Cake Company has an outstanding issue of 8-year convertible bonds with a...
Determining values-Convertible bond Craig's Cake Company has an outstanding issue of 8-year convertible bonds with a $800 par value. These bonds are convertible into 60 shares of common stock. They have a 11 % annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 14% a. Calculate the straight bond value of this bond b. Calculate the conversion (or stock) value of the bond when the market price is $22 per share of common stock...
Determining values-Convertible bond Eastern Clock Company has an outstanding issue of convertible bonds with a $2,000...
Determining values-Convertible bond Eastern Clock Company has an outstanding issue of convertible bonds with a $2,000 par value. These bonds are convertible into 35 shares of common stock. They have a 9% annual coupon interest rate and a 25-year maturity. The interest rate on a straight bond of similar risk is currently 13%. a. Calculate the straight bond value of the bond. b. Calculate the conversion (or stock) value of the bond when the market price of the common stock...
A certain 6% annual coupon rate convertible bond (maturing in 20 years) is convertible at the...
A certain 6% annual coupon rate convertible bond (maturing in 20 years) is convertible at the holders option into 20 shares of common stock. The bond is currently trading at $800. the stock (which pays .71 a share in annual dividens) is currently priced in tje market at $29.78 a share. a) what is the bonds conversion price b) what is the conversion ratio c) what is the conversion value & parity d) what is the conversion permium in dollars...
Dilutive Securities and EPS Worksheets Part 1: Convertible Securities and Detachable Warrants I. JAMC Corp. issues...
Dilutive Securities and EPS Worksheets Part 1: Convertible Securities and Detachable Warrants I. JAMC Corp. issues $10,000,000 of bonds on May 24, 2018 at a discount of $600,000. Interest on the bonds is payable each October 24 and May 24 Each $1,000 bond (i.e., there were 10,000 issued) is convertible to 20 shares of common stock (par value $3). On October 24, 2022, 2,000 of the bonds are converted. At the time of the conversion, the total remaining unamortized discount...
Dadayeva Inc. has $5 million of 6% convertible bonds outstanding. Each $1,000 bond is convertible into...
Dadayeva Inc. has $5 million of 6% convertible bonds outstanding. Each $1,000 bond is convertible into 50 no par value common shares. The bonds pay interest on January 31 and July 31. On July 31, 2020, the holders of $1,250,000 of these bonds exercised the conversion privilege. On that date, the market price of the bonds was 110, the market price of the common shares was $40, the carrying value of the common shares was $20, and the Contributed Surplus—Conversion...
Carla Vista Inc. has $2 million of 7% convertible bonds outstanding. Each $1,000 bond is convertible...
Carla Vista Inc. has $2 million of 7% convertible bonds outstanding. Each $1,000 bond is convertible into 20 no par value common shares. The bonds pay interest on January 31 and July 31. On July 31, 2020, the holders of $640,000 of these bonds exercised the conversion privilege. On that date, the market price of the bonds was 112, the market price of the common shares was $59, the carrying value of the common shares was $30, and the Contributed...
10. A $2 million jumbo CD is paying a quoted 3.55% interest rate on 6-month maturity CDs. If after the CD is issued, the market rate on the CD falls to 3.2%. What is the secondary market price of the CD? A) $1,972,384 B) $1,019,192 C) $2,006,783 D) $2.006,896 E) $2,003,445 11. Hilton Hotels Corp. has a convertible bond issue outstanding. Each bond, with a face value of $1,000, can be converted into common shares at a rate of 61.2978...
Determining values—Convertible bond Craig's Cake Company has an outstanding issue of 15-year convertible bonds with a $800 par value. These bonds are convertible into 75 shares of common stock. They have a 12% annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 17%. a. Calculate the straight bond value of this bond. b. Calculate the conversion (or stock) value of the bond when the market price is $23 per share of common stock. c....
Determining values-Convertible bond Craig's Cake Company has an outstanding issue of 8-year convertible bonds with a $800 par value. These bonds are convertible into 60 shares of common stock. They have a 11 % annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 14% a. Calculate the straight bond value of this bond b. Calculate the conversion (or stock) value of the bond when the market price is $22 per share of common stock...
Determining values-Convertible bond Eastern Clock Company has an outstanding issue of convertible bonds with a $2,000 par value. These bonds are convertible into 35 shares of common stock. They have a 9% annual coupon interest rate and a 25-year maturity. The interest rate on a straight bond of similar risk is currently 13%. a. Calculate the straight bond value of the bond. b. Calculate the conversion (or stock) value of the bond when the market price of the common stock...
Dilutive Securities and EPS Worksheets Part 1: Convertible Securities and Detachable Warrants I. JAMC Corp. issues $10,000,000 of bonds on May 24, 2018 at a discount of $600,000. Interest on the bonds is payable each October 24 and May 24 Each $1,000 bond (i.e., there were 10,000 issued) is convertible to 20 shares of common stock (par value $3). On October 24, 2022, 2,000 of the bonds are converted. At the time of the conversion, the total remaining unamortized discount...
Most questions answered within 3 hours.
-
Why did so many investment banks have to start buying CDO’s and
other mortgaged backed securities...
asked 9 minutes ago -
The mean cost of domestic airfares in the United States rose to
an all-time high of...
asked 20 minutes ago -
1.Magazine Luiza is a Brazilian retail chain for consumer
electronics. The company currently has 100 stores...
asked 19 minutes ago -
What is the molarity of ZnCl2 that forms when 25.0 g of zinc
completely reacts with...
asked 21 minutes ago -
For independent X and Y, we have probability density function
for them where pdf of X...
asked 31 minutes ago -
The decomposition of SO2Cl2 is first order in SO2Cl2 and has a
rate constant of 1.42...
asked 28 minutes ago -
How do I convert from volume percent to mole percent in the
distillation lab? ethy acetate...
asked 34 minutes ago -
8. An air-plane has an effective wing surface area of 14.0 m²
that is generating the...
asked 35 minutes ago -
A railroad worker was a person who worked on setting and moving
railroad tracks. In securing...
asked 34 minutes ago -
using RECURSIVE Functions in Java, create a public static String
doubleLetters (String word)
For ex) that...
asked 41 minutes ago -
With a $16 Trillion national ebt, and projected annual budget
eficits in excess of $1 Trillion...
asked 55 minutes ago -
A machine shop owner wishes to assign each of three machinists
(labeled 1, 2, and 3)...
asked 1 hour ago