A $1,000 bond has a conversion value of $80 a share. The common stock is currently selling for $64.90 a share. What is the current conversion value of the bond?
A) $519.20
B) $662.25
C) $811.25
D) $1,000.00
E) $1,232.67

Question

Quizplus · Accepted Answer

The current conversion value of the bond is calculated by taking the current stock price and multiplying it by the number of shares the bond can be converted into. Since the bond has a conversion value of $80 a share, and the stock is currently $64.90 a share, we first need to find out how many shares the bond converts into: $1,000 / $80 = 12.5 shares. Then, we multiply the number of shares by the current stock price: 12.5 shares * $64.90 = $811.25.

A $1,000 Bond Has a Conversion Value of $80 a Share