A Bond Has a Face Value of $10,000 and a Conversion

question 11

Multiple Choice

A bond has a face value of $10,000 and a conversion ratio of 530. The stock is currently trading at $16.50. What is the conversion price?

• A) $7.55
• B) $16.50
• C) $18.87
• D) $53.00

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Definitions:

Enforce

Refers to the act of compelling observance or compliance with a law, rule, or obligation.

Contract

A legally binding agreement between two or more parties, enforcing obligations and rights in relation to the agreement.

Fraudulently Misrepresentation

An intentionally false representation of fact made by one party to another, with the intent to deceive and for the purpose of inducing the other party to act or refrain from acting in reliance on it.

Rescind

The legal act of canceling, revoking, or annulling a contract or agreement, effectively bringing it to an end.