Question: Please answer all: OG Electronics has bonds outstanding that have $1,000 par value and are convertible into the companys common stock at $160 per stock.

Please answer all:

OG Electronics has bonds outstanding that have $1,000 par value and are convertible into the companys common stock at $160 per stock. The convertibles have annual coupon rate of 11% and mature in 10 years. Straight debt of equivalent risk is yielding 13%. The companys common stock is selling at $182 per share.

Determine the conversion value of the issue.

$874

$923

$1,025

$1,137

Determine the straight-bond value of the issue.

$1,025

$974

$891

$825

Investors should convert their bonds into OGs stocks.

TRUE

FALSE

Determine the minimum stock price at which the investors are better off not converting their bonds.

$142.6

$174.6

$160

$152.8

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