Bavarian Brew Issued Convertible Bonds with a Par Value of $1,000.The

question 85

Multiple Choice

Bavarian Brew issued convertible bonds with a par value of $1,000.The conversion ratio on the bonds is 12.33,the current market price of the bonds is $933.75 and the underlying stock currently sells at $45.25.What is the conversion premium?

• A) 66.48%
• B) 45.25%
• C) 74.67%
• D) 27.58%

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Definitions:

Machine Hours

Machine hours refer to the total operating time of a machine or group of machines during a specific period, used as a basis for allocating costs in manufacturing.

Departmental Overhead Rates

Costs associated with a department's operations that are distributed across products or services, often based on a predetermined rate.

Machine Hours

A measure used in costing to allocate costs based on the number of hours a machine is operated.

Direct Labor Hours

A measure of the total hours worked directly on producing goods, typically used in manufacturing and cost accounting.