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Orient Airlines' Common Stock Currently Sells for $33, and Its

question 25

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Orient Airlines' common stock currently sells for $33, and its 8% convertible debentures (issued at par, or $1,000) sell for $850. Each debenture can be converted into 25 shares of common stock at any time before 2020. What is the conversion value of the bond?


Definitions:

Limited Liability

A corporate structure where an individual's financial risk in the business is restricted to their investment in the company.

Corporation

A legal entity, created by the state, whose assets and liabilities are separate from its owners.

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