A Bond with a Face Value of $1,000 Can Be

question 4

Multiple Choice

A bond with a face value of $1,000 can be exchanged for 35 shares of stock with a current market price of $22 per share.What would the conversion ratio and conversion price be if the bond's issuer declared a stock split of 3-for-1?

• A)75; $7.33
• B)105; $9.52
• C)105; $22.00
• D)35; $22.00
• E)105; $7.33

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Definitions:

Foreign Subsidiary

A company that is owned or controlled by another company (the parent company) but is located in a different country.

Functional Currency

The currency of the primary economic environment in which an entity operates, usually the currency in which it primarily generates and spends cash.

Other Expenses

Costs that fall outside of a company's primary operating activities, such as administrative expenses or interest payments.

Exchange Rates

The frequency at which currencies from different countries can be exchanged, playing a role in international trading and investment schemes.