Maple Aircraft has issued a convertible bond at 4.75% interest due 2020. The market price of the convertible is 93% of face value (face value is $1,000). The conversion price is $45. Assume that the value of the bond in the absence of a conversion feature is about 63% of face value. How much is the convertible holder paying for the option to buy one share of common stock?

The convertible holder paying for the option to buy one share of common stock is $13.63

Explanation:

According to the given data we have the following:

Value of convertible bond=93%*1,000=$930

Value of straight bond=63%*1,000=$630

Value of warrants=$300

Hence, number of warrants per bond=$1,000/$45

number of warrants per bond=22

Therefore, price of one warrant=$300/22

price of one warrant=$13.63

The convertible holder paying for the option to buy one share of common stock is $13.63

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muslims control the north africa during the period of 1500 up

to 1800. they made a barrier to prevent further european exploration from

entering the africa from the north. however, the dutch ware still able to move

toward the interior with having south africa as one of the routes leading to

the east for trading with asia.