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

question 89

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

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Definitions:

Safety Inventory

Additional inventory held to guard against uncertainty in demand or supply, ensuring product availability.

Standard Deviation

A numerical indicator that reflects the degree of spread or variation of data points in a dataset from the average value.

Safety Inventory

Extra stock kept on hand to protect against stockouts caused by variability in demand or supply.

Safety Inventory

A stock buffer maintained to mitigate risk of stockouts due to demand variability and supply chain uncertainties.