Lowrey Metals Company has a $1,000 convertible bond outstanding that has a market value of $1,100. It

Question:

Lowrey Metals Company has a $1,000 convertible bond outstanding that has a market value of $1,100. It has a rate of 7 percent and matures in 10 years. The conversion price is $40. The currently is selling for $37.
a. What is the conversion premium (in percentage terms)?
b. At what price does the need to sell for the conversion value to be equal to the current bond price? Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...