When warrants are exercised, new shares are issued, or treasury stock the company has previously purchased is provided to the warrant holder. When convertibles are exercised: O New capital is provided to the issuer O Debt is replaced by common stock on the balance sheet. Consider the case of Cheung Zap Inc. Cheung Zap Inc. just issued 11-year convertible bonds at a par value of $1,000. At any time before maturity, investors have the option to exchange their bonds for shares of Cheung's common stock at a conversion price of $60.48 Cheung's convertible bonds pay a 7.56% annual coupon, but if Cheung had issued straight-debt bonds (no conversion), it would have had to pay 12.60% annual interest. Based on the information available, complete the table: Value Conversion ratio of Cheung's bond issue: Pure-debt value of this convertible debt issue: Value of the convertible option