The holder of a $1,000 face value bond can exchange the bond any time for 25 shares of stock. Then the conversion ratio
A)is 40.
B)is 25.
C)is 100.
D)depends on the current market price of the bond.

Question

Quizplus · Accepted Answer

The conversion ratio is the number of shares of stock that can be obtained for each bond. In this case, the holder can exchange the bond anytime for 25 shares of stock. Therefore, the conversion ratio is 25.

The Holder of a $1,000 Face Value Bond Can Exchange