Tangshan Mining Company Has an Outstanding Issue of Convertible Bonds

question 138

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 and the market price of the firm's common stock is currently $15.00. Based on this information, the conversion value of the bond is

• A) $1,000.00.
• B) $1,500.00.
• C) $750.00.
• D) none of the above.

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