Question: Lowrey Metals Corporation has a $1,000 convertible bond outstanding that has a market value of $1,100. It has a coupon rate of 7 percent and

Lowrey Metals Corporation has a $1,000 convertible bond outstanding that has a market value of $1,100. It has a coupon rate of 7 percent and matures in 10 years. The conversion price is $40. The common stock currently is selling for $37.

What is the conversion premium (in percentage terms)?

At what price does the common stock need to sell for the conversion value to be equal to the current bond price.

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