A convertible bond was purchased at a market price of $800. The bond has a conversion price
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Question:
A convertible bond was purchased at a market price of $800. The bond has a conversion price of $40 and the stock is currently trading at $45 per share.
Required:
Calculate the conversion ratio and the total value the of common stock upon converting.
After solving for the value of the convertible bond upon conversion will you decide to keep the bond or proceed with the full conversion?
And why?
Related Book For
Fundamentals Of Financial Management
ISBN: 9780273713630
13th Revised Edition
Authors: James Van Horne, John Wachowicz
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