Jackson Metals, Inc., issued a $1,000 convertible corporate bond. Each bond is convertible to 25 shares of

Question:

Jackson Metals, Inc., issued a $1,000 convertible corporate bond. Each bond is convertible to 25 shares of the firm’s common stock.

a. What price must the common stock reach before investors would consider converting their bond to common stock?

b. If you owned a bond in Jackson Metals, would you convert your bond to common stock if the stock’s price did reach the conversion 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...