A Bond with a Face Value of $1000 Is Convertible

question 75

Multiple Choice

A bond with a face value of $1000 is convertible to common stock at a conversion ratio of 60.If the stock is currently trading at $8.20 per share,the value of the bond is probably closest in value to which of the following?

• A)less than $492
• B)about $492
• C)about $508
• D)about $1000
• E)above $1666

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Definitions:

Diplomatic Isolation

A foreign policy strategy where a country or government is purposely excluded from international diplomacy and activities.

Aggressor States

Nations that initiate hostilities or war against other countries without provocation.

Appeasement Policy

A diplomatic strategy of making concessions to an aggressive power in order to avoid conflict, most notoriously associated with British policy toward Nazi Germany in the 1930s.

Austro-Hungarian Empire

A dual monarchy in Central Europe from 1867 to 1918, consisting of Austria and Hungary, known for its diverse population and significant role in World War I.