Straight Bond value The value of a nonconvertible bond with the same coupon rate, maturity, and default risk as the convertible bond 1/2 1/2 2+F SB +∥/2)1 (1+22+ (1+∥/2)2n ∑ (1+i/2)(1+2)2n =(/2)PWFA2.)+F(PF2.) 22-1322-13 Straight Bond Value The value of a nonconvertible bond with the same coupon rate, maturity, and default risk as the convertible bond. (1 + i/2)1 (1 + i/2)2 (1 + i/2) VSB = + + ... + 2*n I / 2 I / 2 + F =  2*n t=1 (1 + i/2)t = (I / 2)(PVIFA i/2, n ) + F (PVIF i/2, n ) (1 + i/2) + 2*n F I / 2 I / 2