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

question 75

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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Definitions:

McLuhan

A theorist known for his work on media theory, famously coining the phrase "the medium is the message."

Machiavelli

A Renaissance political philosopher known for his work "The Prince," advocating for pragmatic and sometimes ruthless political strategies.

Locke

Refers to John Locke, a 17th-century philosopher known for his contributions to liberalism, political philosophy, and theories of mind and consciousness.

Church

A place of worship for Christians or the organized community of Christians as a whole.