Hilton Hotels Corp. has a convertible bond issue outstanding. Each bond, with a face value of $1,000,

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Hilton Hotels Corp. has a convertible bond issue outstanding. Each bond, with a face value of $1,000, can be converted into common shares at a rate of 61.2983 shares of stock per $1,000 face value bond

(the conversion rate), or $16.316 per share. Hilton’s common stock is trading (on the NYSE) at $15.90 per share and the bonds are trading at

$975. (LG 6-2)

a. Calculate the conversion value of each bond.

b. Determine if it is currently profitable for bond holders to convert their bonds into shares of Hilton Hotels common stock.

LO.1

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Financial Markets And Institutions

ISBN: 9781259919718

7th Edition

Authors: Anthony Saunders, Marcia Cornett

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Question Posted: Jul 25, 2024 06:06 AM

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Hilton Hotels Corp. has a convertible bond issue outstanding. Each bond, with a face value of $1,000,

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Financial Markets And Institutions

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