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Management · Q302

International Finance and Treasury

Graduate and Post Graduate · Management · question 302

Q302

Value of conversion option to bond holder is 220 and rate of return on non-convertible bond is 350 then rate of return on convertible bond is

A.
$570
B.
$130
Answer
C.
$670
D.
$1.59

Answer: Option B

Solution

Answer: Option B
Solution:
Rate of return on convertible bond = Rate of return on non-convertible bond - Value of conversion option to bond holder
= 220 = $130.
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