A Convertible Bond Has a Par Value of $1,000 and a Current

question 97

Multiple Choice

A convertible bond has a par value of $1,000 and a current market value of $850.The current price of the issuing firm's stock is $27, and the conversion ratio is 30 shares.The bond's conversion premium is

• A)$40.
• B)$150.
• C)$190.
• D)$200.

---

Definitions:

Voucher System

A control mechanism in accounting where vouchers are created for all transactions that involve the payment of cash or transfer of funds.

Cash Payments

Transactions involving the transfer of cash from one party to another, often related to expenses or purchases.

Voucher System

An accounting system used to control and monitor disbursements by ensuring that all cash disbursements are properly authorized and documented.

Liabilities

Obligations that a company owes to others, including loans, accounts payable, mortgages, and other debts.