1. In January 15 of 2021, Mr. Alberto Gonzales is trying to kill time waiting for the COVID-19 vaccine that is about to be available. He decided to invest in Spahr Cosmetics bonds. The bond has a quoted price of $1,032.00. The bond has a coupon rate of 5% and pays interest on May 15 and November 15 of each year. The exact number of days between November 15 and January 15 is 61, and the exact number of days between November 15 and May 15 is 181. What is the invoice price of the Spahr Cosmetics bond?

1. $1048.85
2. $1040.43
3. $1023.58
4. $1015.15

2. Mr. Alberto also purchased Spahr Cosmetics convertible bond for $1,067.52. It is convertible into 22 shares of the firms common stock. Due to the worldwide pandemic, the current stock price is $13.20 per share. What is the market conversion value of the bond?

1. $13.20
2. $48.52
3. $290.40
4. $80.87

1. What is the conversion premium?
2. $777.12
3. $1054.32
4. $1019.00
5. $986.65

Will you choose to convert the stock now?

1. Yes
2. No
3. Not enough information
4. It depends on your own degree of risk tolerance