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 t...

From Problem 19 the conversion price of the co ...

A firm has just issued convertible preferred shares. These shares have a call feature that permits the

Question:

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

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... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...