SBX Bonds Have a Face Value of $1,000 and Can

question 7

Multiple Choice

SBX bonds have a face value of $1,000 and can be exchanged for 20 shares of stock.Assume SBX declares a 3-for-1 stock split.What conversion price will be needed following the stock split for the conversion value and the straight bond value to be equal assuming the bond continually sells at par?

• A)$16.67
• B)$33.33
• C)$50.00
• D)$150.00
• E)$66.67

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Definitions:

Circular-Flow Diagram

A diagrammatic approach to displaying how financial transactions occur between businesses and family units across marketplaces.

Sector

A distinct subset of the economy, grouped based on their business activities, such as the technology sector or the healthcare sector.

Product Markets

Markets where finished goods and services are bought and sold.

Money Flow

refers to the movement of money within the economy, covering the circulation of money between individuals, businesses, and governments.