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

question 79

Multiple Choice

A convertible bond has a par value of $1,000 and a current market value of $950. The current price of the issuing firm's stock is $22, and the conversion ratio is 40 shares. The bond's conversion premium is

• A) $40.
• B) $70.
• C) $190.
• D) $200.

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Definitions:

Fine China

High-quality porcelain tableware that is often used for special occasions and is valued for its beauty and durability.

Succulent Lobster

Refers to a lobster dish known for its juicy, tender, and flavorful meat.

Cheesecake

A sweet dessert consisting of a mixture of soft, fresh cheese, eggs, and sugar on a crust made from crushed cookies or graham crackers.

Levi's Company

An American clothing company known worldwide for its Levi's brand of denim jeans.