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:

Motivation Index

A measure or indicator of an individual's level of motivation.

Activation

The act of making something active or operative, especially within biological or technical systems.

Persistence

The quality of continuing steadfastly or firmly in some action, purpose, or course of action in spite of opposition.

Specific Nerve Energies

The concept that different sensory nerves convey specific qualities of sensations to the brain, such as sight or sound.