What Is the Value of the Conversion Feature If the Company

question 70

Multiple Choice

What is the value of the conversion feature if the company can issue either for a par value of $1000: 20 year, semiannual plain vanilla bonds at 6.5% or 20 year, semiannual 4.8% convertible bonds (convertible to 15 shares of common stock)

• A) $811.23
• B) $540.82
• C) $217.02
• D) $188.77

---

Definitions:

Industrially Advanced Country

A country that has a highly developed economy and advanced technological infrastructure relative to other less industrialized nations.

Per Capita Income

The average income earned per person in a specific area or country, calculated by dividing the area's total income by its total population.

Income Growth

An increase in the amount of money received from work, investment, or other sources, over time, contributing to economic expansion or personal wealth.

World's Population

The total number of people currently living on Earth.