A convertible bond has a par value of $1,000 and a conversion ratio of 20. If the

Question:

A convertible bond has a of $1,000 and a conversion ratio of 20. If the underlying stock currently sells for $40 and the bond sells at par, what is the conversion premium? The conversion value?
Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...