The Holders of Looper Industries Bond with a Face Value

question 48

Multiple Choice

The holders of Looper Industries bond with a face value of $1,000 can exchange that bond for 20 shares of stock. The stock is selling for $35.00. What would the conversion price and conversion ratio be if Looper Industries had a 4 for 1 stock split?

• A) $15.0; 120
• B) $12.5; 80
• C) $12.5; 120
• D) $15.0; 80
• E) None of these.

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Definitions:

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on demand or at a set time, to the bearer or to an identified party.

Words of Negotiability

Specific phrases or wording required on financial instruments that allow them to be transferred or assigned freely.

Bearer Instrument

A negotiable financial instrument that designates payment to whoever holds or bears the instrument at the time of payment, with no need to prove ownership.

Bearer Instrument

A type of negotiable instrument (such as a bond or check) that is payable to whomever has possession of the instrument, making them the owner.