Jupiter Tech has a convertible bond outstanding, trading in the marketplace at $835. The par value is $1,000, the coupon rate is 8 percent, and the bond matures in 5 years. The conversion price is 54, and the company's common stock is selling for 51 per share. Interest is paid semiannually. Assume interest rates in the market (yield to maturity) are 6 percent. a. What is the conversion value?
b. What is the pure bond component of this convertible bond?
