Hilton Hotels Corp. has a convertible bond issue outstanding. Each bond, with a face value of $1,000,
Question:
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.
AppendixLO1
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Related Book For
ISE Financial Markets And Institutions
ISBN: 9781265561437
8th International Edition
Authors: Anthony Saunders, Marcia Cornett, Otgo Erhemjamts
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