Question: Could you please explain why these two problems are worked differently? Problem 1) A convertible bond has a par value of $1,000 and a current

Could you please explain why these two problems are worked differently?

Problem 1) A convertible bond has a par value of $1,000 and a current market value of $950. The current price of the issuing firm's stock is $22 and the conversion ratio is 40 shares. The bond's conversion premium is A. $40. B. $70. C. $190. D. $200.

$950 - $880 = $70.

Problem 2) A convertible bond has a par value of $1,000 and a current market value of $150. The current price of the issuing firm's stock is $65 and the conversion ratio is 15 shares. The bond's conversion premium is

A. $40. B. $150. C. $175. D. $200.

$1,150 - $975 = $175.

Thanks!

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