Sherwood Forest products has a convertible bond quoted

in the bond market at 80. (Bond quotes represent

percentage of par value. Thus, 70 represents $700, 80

represents $800, and so on.) It matures in 10 years and

carries a coupon rate of 6.0 percent The conversion ratio

is 20, and the common stock is currently selling for $36

per share on the TSX. The bond maturity value is $1,000.

a. Calculate the conversion premium.

b.what price does commonstock need to sell for conversion value to be equal to the current bond price?