Newcomb Company has a bond outstanding with a $1,000 par value and convertible at $30 per share.
Question:
Newcomb Company has a bond outstanding with a $1,000 par value and convertible at $30 per share. What is the bond’s conversion ratio? If the underlying stock currently trades at $25 per share, what is the bond’s conversion value? Would it be advisable for a bondholder to exercise the conversion option?
Par ValuePar 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,...
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The conversion ratio is 3333 shares per bond The conversion value ...View the full answer
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Related Book For 
Principles of Managerial Finance
ISBN: 978-0134476315
15th edition
Authors: Chad J. Zutter, Scott B. Smart
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