Gentherm Inc. has a convertible bond issue outstanding. Each bond, with a face value of $1,000, can

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Gentherm Inc. 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 42.25 shares of stock per

$1,000 face value bond (the conversion rate), or $19.85 per share. Gentherm’s common stock is trading (on the NYSE)

at $19.85 per share and the bonds are trading at $1,025.

(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 Gentherm common stock.

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ISE Financial Markets And Institutions

ISBN: 9781265561437

8th International Edition

Authors: Anthony Saunders, Marcia Cornett, Otgo Erhemjamts

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Question Posted: Jul 25, 2024 06:07 AM

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Gentherm Inc. has a convertible bond issue outstanding. Each bond, with a face value of $1,000, can

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ISE Financial Markets And Institutions

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