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

question 1

Multiple Choice

A bond has a par value of $1,000 and a market value of $833.40. The conversion price is $45.45. What is the conversion ratio?

• A)21
• B)22
• C)23
• D)24
• E)25

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Definitions:

Debt-Equity Ratio

The ratio that delineates the usage of shareholder equity and debt in the financing of company assets.

Pre-Tax Cost

The expense or cost associated with an activity or asset before the application of taxes, often used in financial analysis.

Required Return

The minimum expected return investors demand for investing in a security or project.

Unlevered Return

A return on investment that doesn't account for debt, measuring the performance of an investment as if no borrowing took place.