A Convertible Bond Has a Par Value of $1,000, but Its

question 53

Multiple Choice

A convertible bond has a par value of $1,000, but its current market price is $950. The current price of the issuing company's stock is $19, and the conversion ratio is 40 shares. The bond's conversion premium is ________.

• A) $50
• B) $190
• C) $200
• D) $240

---

Definitions:

Preoperational Period

A stage in Jean Piaget's theory of cognitive development (approximately ages 2-7) during which children begin to engage in symbolic play and struggle with logic.

Reality

The quality or state of being actual or true and the totality of all things possessing actuality, existence, or essence.

Appearance

The way in which someone or something looks or is presented to the senses.

Egocentrically

Thinking solely from one's own viewpoint, often with difficulty in understanding or considering the perspectives of others.