Sam Owns a $1,000 Par Value, Convertible Bond Which Can

question 73

Multiple Choice

Sam owns a $1,000 par value, convertible bond which can be converted now.The conversion ratio is 20 and each share of stock is currently selling for $40 per share.What would be the conversion value of the bond, and should Sam convert the bond or hold it to maturity?

• A)The conversion value is $2,000 and Sam should convert.
• B)The conversion value is $1,200 and Sam should convert.
• C)The conversion value is $975 and Sam should hold the bond to maturity.
• D)The conversion value is $800 and Sam should hold the bond to maturity.

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Definitions:

Mnemonics

Memory aids, especially those techniques that use vivid associations to enable the retrieval of information.

Organizing Material

The process of arranging or structuring information and resources in a systematic way to enhance understanding, retrieval, and use.

Memory Aids

Tools or techniques used to enhance or improve the ability to remember information.

Short-Term

Describing events, memory, or involvement lasting only a limited period of time, often contrasted with long-term.