A Firm Issues the Convertible Debt Shown Above

question 28

Multiple Choice

A firm issues the convertible debt shown above.The price of stock in this company on July 1,2008 is $36.00.What is the minimum call price that would make a bondholder prefer to accept the call rather than convert?

• A)par
• B)par plus 2.6%
• C)par plus 3.0%
• D)par plus 3.4%
• E)par plus 4.1%

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Definitions:

James Marcia

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