You Own a Bond That Has a Face Value of $1,000

question 53

Multiple Choice

You own a bond that has a face value of $1,000 and a conversion ratio of 25. You have just received notification that the bond is being called at a premium of $40. The stock price is $41.20 a share. You should ________ your bond because the conversion value is ________.

• A)convert; less than the call price by $30.00
• B)convert; greater than the call price by $10.00
• C)convert; greater than the call price by $5.00
• D)not convert; less than the call price by $10.00
• E)not convert; greater than the call price by $30.00

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