Given the following information concerning a convertible bond:

Given the following information concerning a convertible bond:
Principal $1000
Coupon5%
Maturity15 years
Call price$1050
Conversion Price$37 (i.e.,27 shares)
Market Price of the
common stock$32
Market Price of the
bond$1040

a)What is the current yield of this bond?
b)What is the value of the bond based on the market price of the common stock?
c)What is the value of the common stock based on the market price of the bond?

 

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