1. A 3% coupon, $1,000 face amount, 5-year bond is convertible into 25 shares of company stock. The current stock price is $30. At maturity, the stock price is $50. Assuming the bond is bought at issuance for $1,000, i.e. par, and interest is paid semi-annually, the total annual return for the investor will be:
   1. 3.00%
   2. 3.62%
   3. 7.24%
   4. 5.40%

2. For the above problem, assuming a normal 5-year borrowing cost of 6.5%, what approximate price does the stock have to reach at maturity for an investor to break-even versus owning a regular company bond?
   1. $20
   2. $50
   3. $48
   4. $60