Bonhomme Co.issued $1,000 par value bonds with a 6% coupon rate, convertible into 25 share of Bonhomme common stock.When the bonds were issued the stock traded at $25 per share.The stock is now at $42 per share and pays a $0.10 per share annual dividend.In the near future

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Since the stock price has risen and the bonds are convertible into shares at a lower price, it is likely that the bondholders will want to convert their bonds to stock. However, the issuing company may not want to have too many shares outstanding, so they may choose to call the bonds. In this case, it would be beneficial for the bondholders to convert their bonds to shares rather than redeem them for the call price (par). Therefore, choice C is the best option as it allows both the bondholders and the issuing company to benefit from the rising stock price.