Automatic Data Processing recently issued $150 million of 612 percent convertible debentures maturing in 2011 The debentures are convertible into common stock at $83 45 a share The companys common stock was trading at about $67 a share when the convertibles were issued a How many shares of common s...

Automatic Data Processing recently issued $150 million of 612 percent convertible debentures maturing in 2011. The debentures

Question:

Automatic Data Processing recently issued $150 million of 61⁄2 percent convertible maturing in 2011. The are convertible into at $83.45 a share. The company’s was trading at about $67 a share when the convertibles were issued.
a. How many shares of can be obtained by converting one $1,000 debenture; that is, what is the conversion ratio?
b. What was the conversion value of this issue when these were originally issued?
c. By what percentage was the conversion price above the stock price when these were originally issued?

Debentures
Debenture DefinitionDebentures are corporate loan instruments secured against the promise by the issuer to pay interest and principal. The holder of the debenture is promised to be paid a periodic interest and principal at the term. Companies who... 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,...