1. Unique Venture Corp. 15% Convertible Preferred shares have a face value of $100.Surrender of the preferred shares gives the preferred holder 4 shares of common stock.The common trades at $22.00.At what common stock share price are you indifferent about converting the convertible preferred shares into common stock shares?
2. Special Venture Co. 10-year convertible bond pays a 6% semi-annual coupon (face value is $1000).The yield to maturity is 10% on debt of this quality.Surrendering the bond under the conversion terms allows the bondholder to receive 50 shares of stock.What is the market value of the convertible bond if the stock trades at $21 per share?