A Bond Has a Face Value of $100 and a Conversion

question 45

Multiple Choice

A bond has a face value of $100 and a conversion ratio of 25. What is the conversion price?

• A) $0.25
• B) $2.50
• C) $4.00
• D) $25.00

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Definitions:

Liabilities

Financial obligations or debts that an entity owes to external parties, which must be settled through the transfer of assets, provision of services, or other economic benefits.

Assets

Resources owned or controlled by a business, expected to produce economic value or future benefits.

Dividends

Payments made by a corporation to its shareholder members, often derived from the company's profits.

Partial Equity Method

An accounting method used when an investing entity holds significant influence but not full control over an investee, and recognizes its share of profits or losses.