Question
(TCO 5) A convertible bond has a face value of $1,000 and the conversion price is $75 per share. The stock is selling at $36
(TCO 5) A convertible bond has a face value of $1,000 and the conversion price is $75 per share. The stock is selling at $36 per share. The bond pays $60 per year in interest and is selling in the market for $965. It matures in 7 years. Market rates are 10% annually.
(I) What is the conversion ratio?
(II) What is the conversion value?
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Personal Finance Building Your Future
Authors: Robert B. Walker, Kristy P. Walker
1st edition
9780077861728, 978-0073530659
