Hello Everyone,
Can anybody help me with the below question. Not sure what this ““Market price (% part)”” signifies?
Thnkx in advance
Brain Vandergriff is a portfolio manager for Southside bank and trust Company. He currently is considering purchasing shares of Deere (maker of farm equipment) and Zenith (a producer of electronic equipment) common stock for inclusion in several portfolios he manages. As an alternative, he also is considering purchasing Deere and Zenith convertible bonds. The portfolios under consideration are mostly equity portfolios having the objective of aggressive growth. Vandergriff expects Deere to benefit from the recent growth in demand for agricultural equipment abroad. Zenith may be on the come-back trail after its earnings growth faltered in the late 1980s. He also expects interest rates to remain stable during the next year.
Convertible
DEERE ZENTH
Coupon 5.50% 6.25%
Maturity (Yrs) 8 18
Rating A- CCC
Conversion rate (# shares) 30.53 32
Market price (% part) 222.50 66.25
Investment Value 85.43 64.95
Call price 105 106
Common Stock Market price 72.88 6.88
Dividend 2.00 0.00
Beta 1.05 1.45
(a) Analyze these two convertibles.
(b) Recommend the convertible debentures that, in your opinion, would be more desirable for purchase by an aggressive, growth-oriented investor. Justify your recommendation