The Swift Company is planning to finance an expansion. The principal executives of the company agree that

Question:

The Swift Company is planning to finance an expansion. The principal executives of the company agree that an industrial company such as theirs should finance growth by issuing rather than by taking on additional debt.
Because they believe that the current price of Swift’s does not reflect its true worth, however, they have decided to sell convertible bonds. Each convertible bond has a equal to $1,000 and can be converted into 25 shares of .
a. What would be the minimum price of the stock that would make it beneficial for bondholders to convert their bonds? Ignore the effects of taxes or other costs.
b. What would be the benefits of including a call provision with these bonds? Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...