A convertible bond is currently selling for $970. It is convertible into 15 shares of common which presently sell for $50 per share. The conversion premium is:
A) $90.
B) $220.
C) 57 shares.
D) 13 shares. $50 stock price * 15 shares = $750 conversion value
Conversion premium = Bond price of $970 - Conversion value of $750 = $220.
Correct Answer:
Verified
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