The Bonds Specialists issued two types of bonds, one premium bond and one discount bond. The companys
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The Bonds Specialists issued two types of bonds, one premium bond and one discount bond. The company’s common stock price is $25 per share.
a. Calculate the conversion price of Bond A, which is a $1,200-par-value bond that is convertible into 50 shares of common stock.
b. Calculate the conversion price of Bond B, which is an $870-par-value bond that is convertible into 30 shares of common stock.
c. If a bondholder holds one premium and one discount bond, should the bondholder exercise the conversion for either of the bonds?
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a To calculate the conversion price of Bond A you need to divide the par value of the bond by the nu...View the full answer
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Related Book For
Principles Of Managerial Finance
ISBN: 9781292018201
14th Global Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
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