Convertible Bonds Hannon Home Products, Inc., recently issued $430,000 worth of 8 percent convertible debentures. Each convertible bond has a face value of $1,000. Each convertible bond can be converted into 24.25 shares of common stock anytime before maturity. The stock price is $31.25, and the market value of each bond is $1,180.

a. What is the conversion ratio?

b. What is the conversion price?

c. What is the conversion premium?

d. What is the conversion value?

e. If the stock price increases by $2, what is the new conversion value? LO.1