A Convertible Bond Has a Face Value of $1,000 and a Conversion

question 409

Multiple Choice

A convertible bond has a face value of $1,000 and a conversion price of $22.50. The bond has a 6 percent coupon and pays interest semi-annually. The bond matures in six years. Similar bonds are yielding 7 percent. The current price of the stock is $21.24. What is the conversion value of this bond?

• A) $882.24
• B) $944.00
• C) $980.85
• D) $1,010.08
• E) $1,059.32

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