You Own a Bond with a Face Value of $1000

question 42

Multiple Choice

You own a bond with a face value of $1000 and a conversion ratio of 45.The conversion price is closest to:

• A)$18.
• B)$22.
• C)$45.
• D)$1000.

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Definitions:

Stock Options

Contracts that give the holder the right, but not the obligation, to buy or sell a specified amount of stock at a predetermined price within a set time period.

Convertible Preferred Stock

A type of preferred stock that offers the holder the option to convert their shares into a predetermined number of common stock shares, usually after a specific date.

Treasury Stock

Shares that were issued and then reacquired by the issuing company, reducing the amount of outstanding stock.

Earnings Per Share

A financial metric used to measure a company's profitability, calculated as net income divided by the number of outstanding shares of its common stock.