QUESTION 1

If a convertible debenture has a conversion term as follows: holders can receive 29.851 shares for each $1,000 face amount bond. At what minimum stock price would it make economic senses to make conversion?

		As long as stock price > $33.50 per share
		As long as stock price < $33.50 per share
		As long as stock price > $29.851 per share
		As long as stock price < $29.851 per share
QUESTION 24

There are two bonds. Bond A: 5-year maturity, 6% bond sold to yield 8%; Bond B: 5-year maturity, 10% bond sold to yield 8%. Which bond has a higher effective cost?

		Bond A
		Bond B
		The same
		Cannot determine

QUESTION 25

Which of the following statements are true? I) The journal entry for sell-off is: Retained earnings xxxx Book value of the equity method investment xxxx II) The journal entry for split-off (pro rata distribution) is: Treasury stock xxxx Book value of the equity method investment xxxx III) The journal entry for split-off (non pro rate distribution) is: Treasury stock xxxx Book value of the equity method investment xxxx Gain/Loss on distribution xxxx IV) The journal entry for spin-off is: Cash xxxx Book value of the equity method investment xxxx Gain/Loss on spin-off xxxx

		Only I and II
		Only II and III
		Only I and IV
		Only I, II, and III
		All of them

QUESTION 27

On January 1, 2006, a company granted 10 million non-qualified employee stock options. The exercise price equals the market price, which is $30 per share. The terms of the award specify three-year cliff vesting. The fair value of option on the grant date is $15 per share. On January 1, 2009, all 8 million stock options were exercised when the stock market price is $60. Tax rate is 40%. What is the tax benefit on January 1, 2009 when the options were exercised?

		300 million
		120 million
		60 million
		150 million