If a $1,000 Convertible Bond Has a Conversion Ratio of 50

question 22

Multiple Choice

If a $1,000 convertible bond has a conversion ratio of 50 and the firm's equity is currently selling for $22 per share, then the:

• A) bond should trade for $900.
• B) bond should trade for $1,000.
• C) bond should trade for $1,100.
• D)firm will have already converted the bond.

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Definitions:

Lacrimal

Pertaining to the glands and ducts that produce and drain tears.

Cortex

The outer layer of various organs and structures, such as the brain, adrenal glands, and hair, involved in diverse functions.

Isthmus

A narrow strip of land connecting two larger bodies of land, or a narrow organ or structure connecting two larger parts.

Cervix

The lower part of the uterus in the female reproductive system, connecting the uterus to the vagina.