A. If the market yield is 7 percent, what are the values of the three first bonds (assume a face value of $1,000)?
B. Why are the values of the bonds lower than their face value?
C. Why is the coupon rate for the convertible bond lower than that for the non-convertible coupon issue?
D. Given that the convertible bond is trading at $1,040, what is the value of the option to convert?
E. Suppose that the market yield rises to 7.5 percent. What are the bond values at that yield?