Question: Hannon Home Products Inc recently issued 2 million worth of

Hannon Home Products, Inc., recently issued $2 million worth of 8 percent convertible debentures. Each convertible bond has a face value of $1,000. Each convertible bond can be converted into 21.50 shares of common stock anytime before maturity. The stock price is $37.15, and the market value of each bond is $1,070.
a. What is the conversion ratio?
b. What is the conversion price?
c. What is the conversion premium?
d. What is the conversion value?
e. If the stock price increases by $2, what is the new conversion value?

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  • CreatedAugust 28, 2014
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