A $1000 Par Value Convertible Bond Has a Conversion Price

question 107

Multiple Choice

A $1000 par value convertible bond has a conversion price of $50. It is currently selling for $1,120 despite the fact that the bond's coupon rate and the market rate are equal. The common stock obtained upon conversion is selling for $54 per share. What is the convertible bond's conversion premium?

• A)$4
• B)$40
• C)$80
• D)$120

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Definitions:

All Diamonds

This is not recognized as a standard key term or concept. NO.

Probability

A measure of the likelihood that an event will occur, often expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Cards

Pieces of thick paper or thin plastic, often rectangular, used for playing games, storing information, or as tools for certain activities.

Same Color

refers to objects or items that share an identical hue or shade.