The Common Stock of Southern Airlines Currently Sells for $33

question 16

Multiple Choice

The common stock of Southern Airlines currently sells for $33, and its 8% convertible debentures (issued at par, or $1,000) sell for $850.Each debenture can be converted into 25 shares of common stock at any time before 2025.What is the conversion value of the bond?

• A) $707.33
• B) $744.56
• C) $783.75
• D) $825.00
• E) $866.25

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Definitions:

International Trade

The exchange of goods and services between countries, driven by the differences in costs of production, resource distribution, and various other factors.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors.

Absolute Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.

Specialize

To focus on a particular area of study, work, or production, becoming an expert or highly skilled in that area.