Tangshan Mining Company Has an Outstanding Issue of Convertible Bonds

question 40

Multiple Choice

Tangshan Mining Company has an outstanding issue of convertible bonds with a $1,000 par value. The bonds have a 10 percent coupon rate, have a 10-year maturity, and are convertible into 100 shares of common stock. The yield to maturity on bonds of similar risk is 10 percent. Based on this information, the straight bond value of the bond is ________.

• A) $1,000.00
• B) $978.39
• C) $1,087.36
• D) $1,123.86

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Definitions:

GDP

Short for Gross Domestic Product, it's the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period.

MV

An abbreviation that can stand for "Market Value," representing the current price at which an asset or service can be bought or sold.

Percentage

A portion or part of a whole, expressed as a fraction of 100.

Constants

Fixed values in an equation or model that do not change, unlike variables which can fluctuate.