Hannon Home Products recently issued £43,000,000 worth of 8 per cent convertible debentures. Each convertible bond has a face value of £100,000. Each convertible bond can be converted into 2,425 shares of equity any time before maturity. The share price is £31.25, and the market value of each bond is £118,000.

(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?