If a $1,000 Convertible Bond with a Market Value of $950

question 91

Multiple Choice

If a $1,000 convertible bond with a market value of $950 has a conversion ratio of 25 when the firm's stock is selling for $36 per share, then:

• A)The bond will be converted immediately
• B)The bond is violating its "price floor"
• C)Conversion now would give the investor a profit of $900
• D)The conversion value of the bond is $900

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Definitions:

Parasympathetic Nervous System

A division of the autonomic nervous system responsible for rest and digestion, often counteracting the fight or flight responses.

Facial Expression

The arrangement and movement of the facial muscles to convey emotion, information, or reactions.

Brows Raised

A facial expression where the eyebrows are lifted upwards, often indicating surprise, curiosity, or questioning.

Eyes Widened

A physical reaction where the eyelids open more than usual, often in response to surprise, shock, or intense focus.