If an Entity Issued a Convertible Note at a Price

question 80

Multiple Choice

If an entity issued a convertible note at a price of $40.00 and it was determined that a debt instrument of similar risk and rate of interest of 10%-but without the option to convert to equity-could be sold for $32.00,what would be the equity component of the convertible note?

• A) $40.00
• B) $32.00
• C) $8.00
• D) $12.00