A Convertible Bond Has a Face Value of $5,000 and a Conversion

question 27

Multiple Choice

A convertible bond has a face value of $5,000 and a conversion price of $80.The bond has a 6 percent coupon,pays interest semi-annually,and matures in 12 years.Similar bonds are yielding 7.5 percent.The current price of the stock is $42 per share.What is the conversion value of this bond?

• A)$1,680
• B)$2,575
• C)$2,625
• D)$4,651
• E)$5,000

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