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:

Theory of Comparative Advantage

An economic principle stating that countries or entities benefit from specializing in and exporting goods for which they have a lower opportunity cost.

Theory of Economies of Scale

An economic concept that describes how as a firm increases its production scale, the average cost per unit of output decreases, leading to increased efficiency.

International Product Life Cycle

A theory explaining how a product matures and sales change over time on an international scale, impacting production and distribution.

Mercantilism

An economic theory that advocates for a country to export more than it imports to accumulate wealth.