Question: A firm has just issued convertible preferred shares These shares
A firm has just issued convertible preferred shares. These shares have a call feature that permits the firm to repurchase the shares at par value (or, in effect, force the conversion into common shares). Usually, the common stock will be trading at least 20 percent above the conversion price before the call feature is invoked. At what price of its common stock will the firm consider calling the preferred shares?
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