You have been hired to value a new 30-year callable, convertible bond. The bond has a coupon rate of 2.3 percent, payable semiannually, and its face value is $1,000. The conversion price is $49, and the stock currently sells for $38. a. What is the minimum value of the bond? Comparable nonconvertible bonds are priced to yield 4.6 percent. b. What is the conversion premium for this bond?
