Beck Corp (BC) Has a Convertible Bond Issue Outstanding

question 146

Multiple Choice

Beck Corp. (BC) has a convertible bond issue outstanding. Each $1,000 in bond outstanding can be converted into 20 common shares. BC's non-convertible bonds have a coupon of 4% paid annually and mature in 15 years. BC's common stock is currently trading at $38 a share and its convertible bonds are trading at $1,100.
-If BC's stock price rises to $55 a share,the price of the convertible bond will rise to ______.

• A) $1,100
• B) $1,000
• C) $1,260
• D) $1,500

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Definitions:

Degenerative Changes

Alterations to body tissues or organs leading to a decline in function or structure, often associated with aging or chronic conditions.

Plasma Volume

The volume of plasma, the liquid component of blood without the cells, important for maintaining blood pressure and volume.

ADH Levels

Refers to the concentration of antidiuretic hormone in the blood, which regulates water balance in the body by affecting the kidneys.

Cerebral Arterial Circle

Also known as the Circle of Willis, it is a ring of interconnected arteries at the base of the brain that provides collateral blood flow between the anterior and posterior circulations.