Question

Gentherm Inc. has a convertible bond issue outstanding. Each bond, with a face value of $ 1,000, can be converted into common shares at a rate of 42.25 shares of stock per $ 1,000 face value bond (the conversion rate), or $ 19.85 per share. Gentherm’s common stock is trading (on the NYSE) at $ 19.85 per share and the bonds are trading at $ 1,025.
a. Calculate the conversion value of each bond.
b. Determine if it is currently profitable for bond holders to convert their bonds into shares of Gentherm common stock.



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  • CreatedJanuary 27, 2015
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