BUSI 420 Homework 8 Fixed-Income Securities Assignment solutions complete answers

BUSI 420 Homework 8 Fixed-Income Securities Assignment solutions complete answers

 

If a mortgage has monthly payments of $1,261, a life of 15 years, and a rate of 5.05 percent per year, what is the mortgage amount? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

What is the monthly payment on a 15-year fixed-rate mortgage if the original balance is $215,000 and the rate is 5.5 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Assume that Kendal Corp. has an outstanding bond issue with a par value of $1,000 and a current market price of $1,041.70 per bond. The bond has eight years remaining and a coupon rate of 6 percent. (Use Excel to answer this question. Enter your answer as a percent rounded to 2 decimal places.)

 

a. Find the current yield to maturity for the Kendal Corp. bond. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

b. If the bond trades at a yield spread of 2.26 percent above comparable U.S. Treasury notes, what must the current yield on Treasury notes be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

c. If the Kendal bond has a make-whole call premium of 135 basis points above the U.S. Treasury rate, what is the make-whole call premium? (Do not round intermediate calculations. Enter the make-whole yield answer as a percent rounded to 2 decimal places. Enter the make-whole price answer in dollars rounded to 2 decimal places.)

 

Ashton Long, a bond analyst, is analyzing a convertible bond. The characteristics of the bond are given below.

 

Compute the bond’s conversion value and conversion price. (Round your conversion price to 2 decimal places.)

 

Consider a 20-year, $190,000 mortgage with a rate of 6.5 percent. Eight years into the mortgage, rates have fallen to 5.2 percent. Suppose the transaction cost of obtaining a new mortgage is $2,100.

 

a. Should the homeowner refinance at the lower rate?

b. Quantify the effect of the homeowner's decision. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

A homeowner took out a 25-year fixed-rate mortgage of $190,000. The mortgage was taken out 9 years ago at a rate of 6.9 percent. If the homeowner refinances, the charges will be $3,200. What is the highest interest rate at which it would be beneficial to refinance the mortgage? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Consider a 15-year, $125,000 mortgage with an interest rate of 5.90 percent. After five years, the borrower (the mortgage issuer) pays it off. How much will the lender receive? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

A homeowner takes a 15-year fixed-rate mortgage for $125,000 at 7.45 percent. After six years, the homeowner sells the house and pays off the remaining principal. How much is the principal payment? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

A 30-year, $230,000 mortgage has a rate of 5.2 percent.

 

You have decided to buy a house. You can get a mortgage rate of 5.6 percent, and you want your payments to be $1,125 or less. How much can you borrow on a 20-year fixed-rate mortgage? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

A homeowner takes out a $347,000, 30-year fixed-rate mortgage at a rate of 5.55 percent. What are the monthly mortgage payments? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

A STRIPS traded on September 30, 2020 matures in 12 years on September 30, 2032. The quoted STRIPS price is 71.75. What is its yield to maturity? (Use Excel to answer this question. Enter your answer as a percent rounded to 2 decimal places.)

 

A STRIPS traded on April 30, 2020, matures in 18 years on May 1, 2038. Assuming a yield to maturity of 4.4 percent, what is the STRIPS price? (Use Excel to answer this question. Enter your answer as a percentage of par value. Round your answer to 4 decimal places.)

 

A Treasury bond with the longest maturity (30 years) has an ask price quoted at 99.9375. The coupon rate is 4.50 percent, paid semiannually. What is the yield to maturity of this bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

A Treasury issue is quoted at 102.65145 bid and 102.735 ask. Assume a face value of $1,000. What is the least you could pay to acquire a bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

A Treasury bill has a bid yield of 3.54 and an ask yield of 3.48. The bill matures in 178 days. Assume a face value of $1,000. (Note: You may need to review material from an earlier chapter for the relevant formula.)

 

A taxable issue yields 6.4 percent, and a similar municipal issue yields 4.9 percent. What is the critical marginal tax rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

A taxable corporate issue yields 5.6 percent. For an investor in a tax bracket of 35 percent, what is the equivalent after tax yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Assume a municipal bond has 16 years until maturity and sells for $5,240. It has a coupon rate of 4.10 percent and it can be called in 6 years. What is the yield to call if the call price is 105 percent of par? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

A municipal bond with a coupon rate of 3.6 percent has a yield to maturity of 4.6 percent. Assume a face value of $5,000. If the bond has 20 years to maturity, what is the price of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

A STRIPS with 21 years until maturity and a face value of $10,000 is trading for $7,550. What is the yield to maturity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

What is the price of a STRIPS with a maturity of 9 years, a face value of $10,000, and a yield to maturity of 6.9 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

A convertible bond has a coupon of 9.5 percent, paid semiannually, and will mature in 18 years. If the bond were not convertible, it would be priced to yield 8.5 percent. The conversion ratio on the bond is 15 and the stock is currently selling for $41 per share. What is the minimum value of this bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

You own a bond with a coupon rate of 5.2 percent and a yield to call of 6.1 percent. The bond currently sells for $1,086. If the bond is callable in five years, what is the call premium of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

A bond matures in 25 years but is callable in 9 years at 125. The call premium decreases by 3 percent of par per year. If the bond is called in 15 years, how much will you receive?

 

A convertible bond has a $1,000 face value and a conversion ratio of 26. If the stock price is $62, what is the conversion value?

 

A company just sold a convertible bond at a par value of $1,000. If the conversion price is $39, what is the conversion ratio? (Round your answer to 2 decimal places.)

 

A convertible bond has a $1,000 face value and a conversion ratio of 29. What is the conversion price? (Round your answer to 2 decimal places.)

 

Question 1

 

A convertible bond has a $1,000 face value and a conversion ratio of 41. What is the conversion price? (Round your answer to 2 decimal places.)

 

Question 2

 

A convertible bond has a conversion ratio of 40 and a par value of $1,000. What is the conversion price? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

 

Question 3

 

A company just sold a convertible bond at a par value of $1,000. If the conversion price is $46, what is the conversion ratio? (Round your answer to 2 decimal places.)

 

Question 4

 

A convertible bond has a $1,000 face value and a conversion ratio of 27. If the stock price is $31, what is the conversion value?

 

Question 5

 

A convertible bond has a conversion ratio of 29 and a par value of $1,000. If the stock is currently priced at $23, what is the conversion value? (Omit the "$" sign in your response.)

 

Question 6

 

Consider a convertible bond with a conversion value of $1,090. The stock is currently priced at $34. What is the conversion ratio of the bond? (Round your answer to 2 decimal places.)

 

Question 7

 

A bond matures in 25 years but is callable in 12 years at 125. The call premium decreases by 3 percent of par per year. If the bond is called in 17 years, how much will you receive?

 

Question 8

 

You own a bond with a coupon rate of 6.1 percent and a yield to call of 7 percent. The bond currently sells for $1,103. If the bond is callable in five years, what is the call premium of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Question 9

 

A convertible bond has a coupon of 7.5 percent, paid semiannually, and will mature in 15 years. If the bond were not convertible, it would be priced to yield 6.5 percent. The conversion ratio on the bond is 20 and the stock is currently selling for $63 per share. What is the minimum value of this bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Question 10

 

Steven Long, a bond analyst, is analyzing a convertible bond. The characteristics of the bond are given below.

 

Compute the bond’s conversion value and conversion price. (Round your conversion price to 2 decimal places.)

 

Question 11

 

What is the price of a STRIPS with a maturity of 11 years, a face value of $10,000, and a yield to maturity of 6.8 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Question 12

 

A STRIPS with 9 years until maturity and a face value of $10,000 is trading for $7,589. What is the yield to maturity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Question 13

 

A municipal bond with a coupon rate of 3.5 percent has a yield to maturity of 4.5 percent. Assume a face value of $5,000. If the bond has 18 years to maturity, what is the price of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Question 14

 

A municipal bond with a coupon rate of 5.80 percent sells for $4,900 and has six years until maturity. What is the yield to maturity of the bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Question 15

 

A municipal bond has 12 years until maturity and sells for $4,900. If the coupon rate on the bond is 5.28 percent, what is the yield to maturity? (Round your answer to 2 decimal places. Omit the "%" sign in your response.)

 

Question 16

 

Assume a municipal bond has 18 years until maturity and sells for $5,440. It has a coupon rate of 4.90 percent and it can be called in 8 years. What is the yield to call if the call price is 110 percent of par? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Question 17

 

A municipal bond has a yield to maturity of 3.7 percent. What corporate bond yield would make an investor in the 30 percent tax bracket indifferent between the two bonds, all else the same? (Round your answer to 2 decimal places. Omit the "%" sign in your response.)

 

Question 18

 

A taxable corporate issue yields 6 percent. For an investor in a tax bracket of 35 percent, what is the equivalent after tax yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Question 19

 

A taxable issue yields 6.2 percent, and a similar municipal issue yields 4.7 percent. What is the critical marginal tax rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Question 20

 

A Treasury bill has a bid yield of 3.54 and an ask yield of 3.48. The bill matures in 178 days. Assume a face value of $1,000.

 

What is the least you could pay to acquire a bill? (Note: You may need to review material from an earlier chapter for the relevant formula.) (Do not round intermediate calculations. Round your answer to 3 decimal places.)

 

Question 21

 

A Treasury bill has a bid yield of 3.58 and an ask yield of 3.52. The bill matures in 100 days. Assume a face value of $1,000. (Note: You may need to review material from an earlier chapter for the relevant formula.)

 

a. At what price could you sell the Treasury bill? (Do not round intermediate calculations. Round your answer to 3 decimal places.)

 

b. What is the dollar spread for this bill? (Do not round intermediate calculations. Round your answer to 3 decimal places.)

 

Question 22

 

A Treasury issue is quoted at 103.51525 bid and 103.575 ask. Assume a face value of $1,000. What is the least you could pay to acquire a bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Question 23

 

A noncallable Treasury bond has a quoted yield of 5.18 percent. It has a 6.15 percent coupon and 13 years to maturity.

 

a. What is its dollar price assuming a $1,000 par value? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

 

b. What is its quoted price?

 

Question 24

 

A Treasury bond with the longest maturity (30 years) has an ask price quoted at 106.9375. The coupon rate is 3.10 percent, paid semiannually. What is the yield to maturity of this bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Question 25

 

A STRIPS traded on May 1, 2016, matures in 18 years on May 1, 2034. Assuming a yield to maturity of 6.1 percent, what is the STRIPS price? (Use Excel to answer this question. Enter your answer as a percentage of par value. Round your answer to 4 decimal places.)

 

Question 26

 

A STRIPS traded on October 1, 2017 matures in 14 years on October 1, 2031. The quoted STRIPS price is 87.40. What is its yield to maturity? (Use Excel to answer this question. Enter your answer as a percent rounded to 2 decimal places.)

 

Question 27

 

A homeowner takes out a $387,000, 30-year fixed-rate mortgage at a rate of 5.35 percent. What are the monthly mortgage payments? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Question 28

 

You have decided to buy a house. You can get a mortgage rate of 5 percent, and you want your payments to be $1,375 or less. How much can you borrow on a 30-year fixed-rate mortgage? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Question 29

 

A 20-year, $205,000 mortgage has a rate of 4.95 percent.

 

a. What are the interest and principal portions in the first payment? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

 

b. What are the interest and principal portions in the second payment? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

 

Question 30

 

A homeowner takes a 30-year fixed-rate mortgage for $145,000 at 8.05 percent. After twelve years, the homeowner sells the house and pays off the remaining principal. How much is the principal payment? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Question 31

 

Consider a 30-year, $155,000 mortgage with an interest rate of 6.25 percent. After ten years, the borrower (the mortgage issuer) pays it off. How much will the lender receive? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Question 32

 

Consider a 20-year, $180,000 mortgage with a rate of 5.40 percent. Five years into the mortgage, rates have fallen to 5 percent. What would be the monthly saving to a homeowner from refinancing the outstanding mortgage balance at the lower rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Problem 21-13 Prepayments (LO3, CFA1)

Consider a 25-year, $195,000 mortgage with a rate of 6.55 percent. Seven years into the mortgage, rates have fallen to 5.25 percent. Suppose the transaction cost of obtaining a new mortgage is $2,150.

a.      Should the homeowner refinance at the lower rate?

multiple choice

o     Yes

o     No

b.     Quantify the effect of the homeowner's decision.

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

 

Problem 21-11 Prepayments (LO3, CFA1)
Consider a 20-year, $175,000 mortgage with a rate of 5.55 percent. Six years into the mortgage, rates have fallen to 5 percent. What would be the monthly saving to a homeowner from refinancing the outstanding mortgage balance at the lower rate?

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

 

Problem 21-10 Mortgage Balances (LO1, CFA1)
Consider a 30-year, $165,000 mortgage with an interest rate of 5.95 percent. After eight years, the borrower (the mortgage issuer) pays it off. How much will the lender receive?

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

 

Problem 21-9 Mortgage Balances (LO1, CFA1)
A homeowner takes a 20-year fixed-rate mortgage for $90,000 at 7.10 percent. After seven years, the homeowner sells the house and pays off the remaining principal. How much is the principal payment?

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

 

Problem 21-8 Mortgage Interest (LO1, CFA1)
A 15-year, $170,000 mortgage has a rate of 5.40 percent.

a.      What are the interest and principal portions in the first payment?

Note: Do not round intermediate calculations. Round your answers to 2 decimal places.

b.     What are the interest and principal portions in the second payment?

Note: Do not round intermediate calculations. Round your answers to 2 decimal places.

 

Problem 21-4 Mortgage Balances (LO1, CFA1)
You have decided to buy a house. You can get a mortgage rate of 5.85 percent, and you want your payments to be $1,000 or less. How much can you borrow on a 15-year fixed-rate mortgage?

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.



Problem 21-3 Mortgage Payments (LO1, CFA1)
A homeowner takes out a $327,000, 20-year fixed-rate mortgage at a rate of 5.65 percent. What are the monthly mortgage payments?

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

 

Problem 21-2 Mortgage Balances (LO1, CFA1)
If a mortgage has monthly payments of $1,285, a life of 30 years, and a rate of 4.35 percent per year, what is the mortgage amount?

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

 

Problem 21-1 Mortgage Payments (LO1, CFA1)
What is the monthly payment on a 30-year fixed-rate mortgage if the original balance is $280,000 and the rate is 4.55 percent?

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

 

Problem 18-26 Make-Whole Call Premium (LO2, CFA5)
Assume that Kendal Corp. has an outstanding bond issue with a par value of $1,000 and a current market price of $1,040.70 per bond. The bond has seven years remaining and a coupon rate of 6 percent. (Use Excel to answer this question. Enter your answer as a percent rounded to 2 decimal places.)


a. Find the current yield to maturity for the Kendal Corp. bond. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)






b. If the bond trades at a yield spread of 2.22 percent above comparable U.S. Treasury notes, what must the current yield on Treasury notes be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)






c. If the Kendal bond has a make-whole call premium of 130 basis points above the U.S. Treasury rate, what is the make-whole call premium? (Do not round intermediate calculations. Enter the make-whole yield answer as a percent rounded to 2 decimal places. Enter the make-whole price answer in dollars rounded to 2 decimal places.)

 

Problem 18-25 STRIPS YTM (LO1, CFA2)
A STRIPS traded on February 1, 2024 matures in 12 years on February 1, 2036. The quoted STRIPS price is 75.35. What is its yield to maturity?

Note: Use Excel to answer this question. Enter your answer as a percent rounded to 2 decimal places.

 

Problem 18-24 STRIPS Price (LO1, CFA2)
A STRIPS traded on May 1, 2023, matures in 18 years on May 1, 2041. Assuming a yield to maturity of 5.2 percent, what is the STRIPS price?

Note: Use Excel to answer this question. Enter your answer as a percentage of par value. Round your answer to 4 decimal places.

 

Problem 18-20 Convertible Bonds (LO2, CFA5)
Ashton Long, a bond analyst, is analyzing a convertible bond. The characteristics of the bond are given below.

Convertible Bond Characteristics
Par value
$ 1,000
 
Annual coupon rate (annual pay)
6%
 
Conversion ratio
30
 
Market price
106%
of par
Straight value
99%
of par
Underlying Stock Characteristics
Current market price
$ 27
per share
Compute the bond’s conversion value and conversion price.

Note: Round your conversion price to 2 decimal places.

 

Problem 18-19 Treasury Yields (LO1, CFA2)
A Treasury bond with the longest maturity (30 years) has an ask price quoted at 104.4375. The coupon rate is 3.60 percent, paid semiannually. What is the yield to maturity of this bond?

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

 

Problem 18-18 Treasury Prices (LO1, CFA2)
A Treasury issue is quoted at 103.14505 bid and 103.215 ask. Assume a face value of $1,000. What is the least you could pay to acquire a bond?

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

 

Problem 18-17 Treasury Prices (LO1, CFA2)
A Treasury bill has a bid yield of 2.87 and an ask yield of 2.85. The bill matures in 203 days. Assume a face value of $1,000. (Note: You may need to review material from an earlier chapter for the relevant formula.)

a.   At what price could you sell the Treasury bill?

Note: Do not round intermediate calculations. Round your answer to 3 decimal places.

b.   What is the dollar spread for this bill?

Note: Do not round intermediate calculations. Round your answer to 3 decimal places.

 

Problem 18-16 Treasury Prices (LO1, CFA2)
A Treasury bill has a bid yield of 2.79 and an ask yield of 2.77. The bill matures in 175 days. Assume a face value of $1,000.

What is the least you could pay to acquire a bill? (Note: You may need to review material from an earlier chapter for the relevant formula.)

Note: Do not round intermediate calculations. Round your answer to 3 decimal places.

 

Problem 18-15 Tax Rates (LO3, CFA2)
A taxable issue yields 6.4 percent, and a similar municipal issue yields 4.9 percent. What is the critical marginal tax rate?

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

 

Problem 18-14 Tax Equivalent Yields (LO3, CFA2)
A taxable corporate issue yields 6.1 percent. For an investor in a tax bracket of 35 percent, what is the equivalent after tax yield?

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

 

Problem 18-13 Yield to Call (LO2, CFA5)
Assume a municipal bond has 28 years until maturity and sells for $5,340. It has a coupon rate of 4.50 percent and it can be called in 8 years. What is the yield to call if the call price is 105 percent of par?

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

 

Problem 18-12 Yield to Maturity (LO3, CFA1)
A municipal bond with a coupon rate of 5.50 percent sells for $4,885 and has nine years until maturity. What is the yield to maturity of the bond?

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

 

Problem 18-11 Municipal Bonds (LO3, CFA2)
A municipal bond with a coupon rate of 3.4 percent has a yield to maturity of 4.4 percent. Assume a face value of $5,000. If the bond has 15 years to maturity, what is the price of the bond?

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

 

Problem 18-9 STRIPS YTM (LO1, CFA2)
A STRIPS with 11 years until maturity and a face value of $10,000 is trading for $7,641. What is the yield to maturity?

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

 

Problem 18-8 STRIPS Price (LO1, CFA2)
What is the price of a STRIPS with a maturity of 10 years, a face value of $10,000, and a yield to maturity of 5.4 percent?

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

 

Problem 18-6 Convertible Bonds (LO3, CFA5)
A convertible bond has a coupon of 5.5 percent, paid semiannually, and will mature in 12 years. If the bond were not convertible, it would be priced to yield 4.5 percent. The conversion ratio on the bond is 20 and the stock is currently selling for $41 per share. What is the minimum value of this bond?

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

 

Problem 18-5 Call Premium (LO2, CFA5)
You own a bond with a coupon rate of 6.4 percent and a yield to call of 7.3 percent. The bond currently sells for $1,087. If the bond is callable in five years, what is the call premium of the bond?

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

 

Problem 18-4 Callable Bonds (LO2, CFA5)
A bond matures in 25 years but is callable in 8 years at 124. The call premium decreases by 1 percent of par per year. If the bond is called in 15 years, how much will you receive?

 

Problem 18-3 Conversion Value (LO3, CFA5)
A convertible bond has a $1,000 face value and a conversion ratio of 23. If the stock price is $74, what is the conversion value?

 

Problem 18-2 Conversion Ratio (LO3, CFA5)
A company just sold a convertible bond at a par value of $1,000. If the conversion price is $48, what is the conversion ratio?

Note: Round your answer to 2 decimal places.

 

Problem 18-1 Conversion Price (LO3, CFA5)

A convertible bond has a $1,000 face value and a conversion ratio of 27. What is the conversion price?

Note: Round your answer to 2 decimal places.